Results for announcement to the market 31 March 2024 Name of company Little Green Pharma Ltd ABN 44 615 586 215 Reporting period 31 March 2024 Previous corresponding period 31 March 2023 Audited Financial Report for the financial year ended 31 March 2024 This page and the following pages comprise the period end information given to the ASX under Listing Rule 4.3A. The audited results are prepared in accordance with Australian Accounting Standards and are presented in Australian dollars. Revenue from ordinary activities Up $5,772,707 29% to $25,631,830 Loss after tax from continuing operations Down $404,093 5% to $(8,152,558) Loss before tax from continuing operations Down $404,093 5% to $(8,152,558) Revenue from ordinary activities is up by $5,772,707 from $19,859,123 for the year ending 31 March 2023 to $25,631,830 for the year ending 31 March 2024. Revenue from ordinary activities consists primarily of revenue from the sale of medicinal cannabis oil and flower products. The loss after tax from continuing operations includes share based payments expense of $2,252,783, depreciation and amortisation of $3,078,879, and a net fair value movement in biological assets of $511,938. The net operating cash flow is a net positive amount of $66,791 for the year ending 31 March 2024. Dividends No dividends are proposed, and no dividends were declared or paid during the current or prior year. Net tangible asset backing Reporting period Previous period Net tangible assets per ordinary security $0.246 $0.264 Change in ownership of controlled entities There were no changes in ownership of any controlled entities during the period. Accounting standards used by foreign entities All subsidiaries use International Financial Reporting Standards. Independent auditor’s report The Financial Report contains an Independent Auditor’s Audit Report. This report contains an emphasis of matter on going concern. Review of operations See page 23 of the Annual Report for a review of the Company’s operations. This statement was approved by the Board of Directors. Alistair Warren Company Secretary Annual Report 2024 ABN 44 615 586 215 LITTLE GREEN PHARMA FOR THE YEAR ENDED 31 MARCH 2024 A world of difference We are passionate about transforming lives. Our vision is to reimagine herbal medicines and do extraordinary things for our patients. It’s at the heart of everything we do, and defines our culture. We are proud of what we've done and where we're going. We are Little Green Pharma. We're big on changing lives. Contents 1 LGP snapshot 2 LGP timeline FY2024 3 Chairman’s letter 4 Message from the Chief Executive Officer 5 Strategy 6 Cultivation and manufacturing 7 Sales and distribution 8 Health practitioner engagement and customer care 9 Research and innovation 10 Psychedelics 11 Environmental, Social, Governance (ESG) 12 Directors’ report 13 Remuneration report 14 Independent auditor’s report 15 Financial report 16 LGP milestones timeline 17 ASX additional information Corporate Directory Directors Mr Michael D Lynch-Bell Independent Non-Executive Chair Dr Neale Fong Independent Non-Executive Director Ms Beatriz Vicén Banzo Independent Non-Executive Director Ms Fleta Solomon Executive Director Mr Angus Caithness Executive Director Chief Executive Officer Mr Paul Long General Counsel & Company Secretary Mr Alistair Warren Registered Office Level 2, Suite 2, 66 Kings Park Road West Perth, Western Australia 6005 Telephone: +61 8 6280 0050 Facsimile: +61 8 6323 4697 Email: cosec@lgp.global Website: www.littlegreenpharma.com Auditor BDO Audit (WA) Pty Ltd Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth, Western Australia 6000 Share Registry Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace Perth, Western Australia 6000 Website: www.investorcentre.com/contact Securities Exchange Australian Securities Exchange Limited Central Park, 152-158 St Georges Terrace Perth, Western Australia 6000 ASX Code: LGP ABN: 44 615 586 215 Notice of AGM The Annual General Meeting of Little Green Pharma Ltd will be held at 3:30pm (WST) on 25 July 2024. This meeting will be held via Zoom webinar unless otherwise advised. Our team has had a tremendous year, and I’d like to personally thank each of them for their tireless efforts and excellence in delivering on the Company’s strategy. PAUL LONG, CHIEF EXECUTIVE OFFICER 1 LGP snapshot 4 LITTLE GREEN PHARMA Annual Report 2024 [1] Cash gross profit is calculated by taking the cost of goods sold and adding back any related depreciation, amortisation and share based payments. [2] Adjusted EBITDA is calculated by taking the EBITDA which is earnings before interest, tax, depreciation and amortization and adjusting it for share based payments, fair value changes on inventory and biological assets, any gains or losses on disposal of assets, any research and development rebates and any government grants. OFFICES 3 STAFF 94 FEMALE STAFF 59% FEMALE BOARD MEMBERS 40% REVENUE FY24 $25.6m FY23 $19.9m 29% CASH GROSS PROFIT [1] FY24 $16.7m FY23 $16.8m 1% CASH GROSS PROFIT % [1] FY24 65% FY23 85% 23% OPERATING EXPENSES FY24 $22.3m FY23 $26.1m 15% ADJUSTED EBITDA [2] FY24 ($3.3m) FY23 ($7.5)m 56% NET TANGIBLE ASSETS FY24 $73.8m FY23 $78.6m 6% OPERATING CASH FLOW FY24 $0.1m FY23 ($6.9)m 101% CASH AT BANK FY24 $5.0m FY23 $12.4m 60% BORROWINGS FY24 $3.5m FY23 $11.7m 70% WORKING CAPITAL FY24 $15.0m FY23 $20.1m 25% 5 BRANDS 3 [1] NEW PRODUCTS (FY2024) 16 TOTAL PRODUCTS 26 [2] DISTRIBUTION COUNTRIES 11 [4] NEW DISTRIBUTION PARTNERS 5 PRODUCTION FACILITIES 3 [5] GENETICS BANK 20 strains STUDIES/TRIALS 13 [3] TOTAL DISTRIBUTION PARTNERS 11 PRODUCTION CAPACITY 30 TPA [6] LGP snapshot [1] Little Green Pharma, CherryCo, Reset Mind Sciences. [2] Includes 17 flower products, 6 oil products, 3 vape products. [3] LGP supplies products to 13 clinical studies. Figure includes LGP’s psilocybin clinical trial. LGP was largest supplier to French medicinal cannabis trial during FY2024. [4] Australia, Germany, France, UK, Italy, Poland, Denmark, Switzerland, Portugal, Sweden and Belgium. [5] Perth, South West WA, Denmark (EU). [6] Cannabis biomass. 6 LITTLE GREEN PHARMA Annual Report 2024 LITTLE GREEN PHARMA Annual Report 2024 7 2 LGP timeline FY2024 Q1 Seven new products launched Extended French Pilot supply contract awarded 60% reduction in long term debt QUEST Global Initiative launched Psilocybin down-scheduled Psilocybin trial ethics approval granted Psilocybin production facility commissioned Psilocybin clinic and GMP manufacturing facility leased Q2 Five new products launched Post-French Pilot pathway announced QUEST Initiative 3-month results released First psilocybin mushrooms produced Two journal articles published Paul Long appointed CEO FY2023 REVENUE $19,859,123 8 LITTLE GREEN PHARMA Annual Report 2024 Q4 Four new products launched Flower sales up 57% Nearly $2 million in CherryCo sales since late December Cannabis legalised in Germany First deliveries into Poland Reset demerger ceased First Reset clinical trial patients treated Q3 Four new products launched New supply agreements into UK, Italy and Switzerland French government confirms post-Pilot medicinal cannabis legalisation framework First shipment to Switzerland Reset psilocybin trial commences recruitment CherryCo brand launched Q1 FY2025 > US reschedules cannabis to Schedule III FY2024 REVENUE $25,631,830 9 Chairman's letter 3 Dear Little Green Pharma shareholders, I am pleased to present Little Green Pharma’s (“LGP” or the “Company”) annual report for the 2024 financial year (“FY2024"). Little Green Pharma’s goal has always been to make a difference in patients’ lives, by providing a wide range of medicinal cannabis products at accessible price points, facilitating independent prescriber education, and sponsoring R&D initiatives to contribute to scientific and medical literature on cannabis treatments. Since its origins in 2017, the LGP Group has: • sponsored two of the largest observational studies globally focusing on the quality of life and health economic impacts of medicinal cannabis on patients with chronic disease while contributing to multiple publications in international peer-reviewed journals • supplied or agreed to supply medicinal cannabis products into 12 observational studies or clinical trials / studies in Australia and Europe investigating the use of cannabis and CBD in the treatment of fibromyalgia, chronic refractory pain, epilepsy, Parkinson’s disease, cancer symptom treatment and management, Alzheimers, Dementia, pruritus, and HIV • been the leading supplier (>70%) of medicinal cannabis products into the French Pilot and post-Pilot transition phase resulting in LGP being the largest supplier of medicinal cannabis in the country • provided one of the most extensive and well-respected prescriber education platforms in Australia while maintaining a significant independent prescriber network • supplied or has contracts to supply medicinal cannabis products in 11 countries • developed one of the most extensive product ranges in the Australian market with 23 branded products in multiple formulations across the LGP and CherryCo brands and a bank of over 20 further genetics in its development pipeline • developed one of Australia’s leading psychedelic companies, Reset Mind Sciences, and sponsored one of the first psychedelic clinical trials in Australia • become one of the most trusted medicinal cannabis brands in Australia and Europe 10 LITTLE GREEN PHARMA Annual Report 2024 Little Green Pharma Annual Report 2024 In FY2024, the Company had a very successful year, which included: • the introduction of 16 new products and launch of our CherryCo brand • the launch of our psilocybin clinical trial in partnership with University of WA and Harry Perkins Institute of Medical Research • the launch the QUEST Global Initiative in partnership with Curtin University, one of the largest observational studies into medical cannabis for the treatment of chronic disease • contributions to publications in three peer- reviewed international journals • the provision of free monthly online training webinars to prescribers and sponsorship of third-party online training with CPD accredited points • the launch of a face-to-face GP mentor program designed and led by an independent prescriber to give new or inexperienced prescribers guidance on prescribing cannabis across a variety of conditions Across our teams in Australia and Europe, we have also built an exceptional team and culture. In FY2024 we: • worked hard to establish a positive and rewarding culture across our global team located in Australia, Denmark, Germany, UK and South Africa, including fostering a culture of open and transparent communication via regular updates and offsite strategy days; improving staff benefits with additional compassionate access, professional development, and various monthly and bi-annual employee award programs; and circulating regular internal feedback from prescribers and patients on Company products and services • maintained our excellent diversity profile with 59% female staff and 40% female Board members; and an average age of 45 and age range of 23 – 73 years • had zero lost time incidents • maintained our robust environmental standards including no use of pesticides and significant renewable power purchases, recycling of growing materials, and use of rainwater and treatment and re-use of waste-water at our Denmark operations. These accomplishments were recognised by LGP’s nominations for various Cannabiz 2024 Awards including Best Patient-Focused Initiative, R&D project of the year, Best Education or Engagement Initiative, and Company of the Year. While the Company has had a successful year, we are aware that more needs to be done. Global cannabis markets are continually evolving, and with this comes increased competition in key markets such as Australia and Germany, which have seen dramatic rises in new entrants and products over the last 12-months. Capital markets, too, remain weak, with appetite for significant investment in Australian cannabis stocks currently diminished. LGP is aware of these risks but believes it is well placed to manage them and expects opportunities for companies that weather them successfully. Once again, I would like to thank LGP’s staff and management, and of course our loyal shareholders, without whose support we would not be able to turn our goals into reality. I am very optimistic about our future as we work towards making FY2025 an even bigger success than FY2024. Yours sincerely, Michael D Lynch-Bell Independent Non-Executive Chair 11 Dear shareholders, I am pleased to report Little Green Pharma achieved many key milestones in FY2024 and made remarkable progress in all aspects of our operations across the entire cannabis supply chain. From the beginning, our strategy has been to be a first mover to remain nimble, and operate across the entire value chain – from cultivation to GMP manufacturing to sales and distribution. This strategy allows LGP to respond to a rapidly changing global industry, identify new prescriber and patient trends, establish controls over supply, cost, and quality; and identify lucrative areas for future growth. Some of the key highlights from FY2024 included: 1. FINANCIAL ACHIEVEMENTS We achieved record revenues of $25.6 million for FY2024, an increase of nearly 30% from the previous financial year, and reduced our loss after tax from ($9.2 million) to ($8.2 million). 2. PRODUCT INNOVATION In FY2024, we introduced 16 new products to our portfolio, being 12 new flower products, including seven new products under the CherryCo brand, one new oil product and three new vaporisation products. The performance of our new CherryCo brand in the booming flower market in Australia was particularly pleasing with the brand contributing $2 million in sales since its launch in late December and contributing to over 70% growth in flower sales without cannibalising other LGP flower sales. 3. EVOLUTION TOWARDS A ONE-STOP-SHOP SUPPLIER In FY2024, we continued to refine our ambition as a one- stop-shop supplier of medicinal cannabis. Our ability to operate across the entire cannabis supply chain is designed to ensure self-sufficiency and better control of margins with the aim of extracting maximum value for our shareholders. Importantly, it places LGP at a significant advantage to our peers in the industry who typically operate within a single dimension. Message from the Chief Executive Officer 4 12 LITTLE GREEN PHARMA Annual Report 2024 With these achievements in mind, I would now like to look at what’s on the horizon for the coming year. While it has been a tough time in cannabis global markets for a few years, there are significant tail winds which could be catalysts for a re-rating of Australian cannabis stocks including LGP. In France, the emergence of a post-Pilot legalised medicinal cannabis market has tremendous potential for LGP as the primary supplier to French patients for the past three years. The Company is currently working hard to become the first supplier under the territory’s new ad-hoc cannabis supply authorisation pathway from January 2025. In Germany, the recent partial legalisation of cannabis and removal for cannabis from the Narcotics List has already seen significant growth in clinic activity as new and existing cannabis patients take advantage of its new status, and LGP expects this activity to flow through to increased cannabis sales. In the US, the pending reclassification of cannabis from Schedule I to Schedule III by the Drug Enforcement Administration (DEA) will have significant implications for the US cannabis market and has already led to re-ratings of US stocks. As LGP's share price has historically mirrored the share price of North American cannabis companies, it is anticipated that any re-rating of US stocks will flow through to Australian medicinal cannabis companies including LGP. 4. FIRST MOVER ADVANTAGE LGP further positioned itself to take advantage of developments and growth both in Australia and Europe, including the key markets of Germany, France, Italy, UK and Poland. This differentiates LGP from almost all other Australian cannabis companies. Our strategy as first mover in these key markets paid dividends during the year with LGP anticipating to significantly benefit from new laws governing medicinal cannabis supply in France. In addition, Germany’s recent move to legalise medicinal cannabis is showing early signs of strong patient uptake within the country – the largest European market for medicinal cannabis. This legislation is also a likely catalyst and roadmap for other legalisation initiatives in other markets. 5. RESEARCH & DEVELOPMENT Our commitment to and investment in research & development continued during the period with LGP teaming up with Curtin University and the Health Insurance Fund of Australia (HIF) to launch QUEST Global following the success of the original award- winning QUEST Initiative, as well as with the University of WA and Fiona Stanley Hospital to launch the Reset Mind Sciences clinical trial into the use of psilocybin for the treatment of treatment resistant depression. LGP also supplies or sponsors product to 13 clinical studies in Australia and Europe with various universities and research centres into the treatment of cancer patient symptom management, advanced stage and breast cancer, fibromyalgia, pruritus, Alzheimer’s and dementia. We believe these developments are evidence of the start of a global regulatory shift in cannabis markets, with LGP extremely well-positioned to benefit from such a trend. Of course, LGP expects challenges in the year ahead. The growth in new suppliers and products in the Australian market has been rapid, with many suppliers previously locked out TGA GMP requirements entering the market with a range of formulations. LGP is well positioned to compete with them, and has done so successfully with its growth in new LGP flower products and CherryCo brand, but is very aware that it needs to continually evolve and expand to grow its market share and achieve sustainable profitability. We also expect rationalisation in the industry and will certainly consider all developments there as well. Thank you to our team for all your hard work during FY2024 and to our shareholders for your continued trust and support. Paul Long Chief Executive Officer 13 LGP’s core strategy remains unchanged: build sales in key markets, leverage the resulting manufacturing expertise and capacity to unlock other high-value markets, and continue to develop formulation insights through clinical evidence and develop improved delivery methods to gain short term market share and facilitate long term growth. This strategy has led LGP into many directions: We developed the first locally produced medicinal cannabis product in Australia. After recognising the potential of the German market for Australian suppliers, We made preliminary plans to list on a European exchange and developed a wide range of oil products. We successfully listed on the ASX and exported our first products to Europe. We acquired one of the largest GMP cannabis flower manufacturing facilities in Europe for C$20 million (construction cost: C$120 million), embarked on the world’s largest clinical study into medicinal cannabis for the treatment of chronic conditions, began supplying into the French national cannabis trial, and started our psychedelics business. We built our EU market foundations with key distributors, optimised our production assets in Denmark and Australia, and developed a broad genetics bank for our Danish facility. We started delivering new Danish flower products into Australia and Europe, obtained ethics approval for our psilocybin clinical trial, and signed our strategic psychedelics partnership with a private health insurer. We launched 16 new products including our best-selling CherryCo brand, delivered products into seven countries, initiated our follow-up QUEST Global study following the successful 3-month QUEST Initiative results, and commenced our psychedelics clinical trial. 2018 2019 Strategy 5 2020 2021 2022 2023 2024 14 LITTLE GREEN PHARMA Annual Report 2024 Product insights and drug delivery Develop formulation insights through clinical evidence and new and improved delivery methods for patients. The Company’s growth strategy comprises three key pillars: 3 Patient acquisition in operating jurisdictions Sales in Australia demonstrate market validity and generate immediate cash flow to support development of international pathways. 1 Clear pathway to international sales Early mover commercial volumes in international markets the primary mechanism to secure and grow offshore market share. 2 Our strategy is also to be a first or early mover in key markets while remaining flexible to adapt to rapidly changing markets. Today we have a secure, expandable portfolio of cannabis products, excellent distribution partnerships across Australia and Europe, various R&D growth opportunities, an excellent brand and reputation in Australia and Europe, and a market-leading psychedelics business. We have a team of experienced veterans, many of whom have been here since our beginning, with broad expertise across the corporate, sales, cultivation, manufacturing, regulatory, and quality domains. This ensures LGP is well positioned to capitalise on opportunities in global cannabis markets as they continue to grow and evolve. 15 During FY2024, LGP actively evolved its production operations to align with emerging product segmentation in the Australian and overseas cannabis markets. In Denmark, LGP focused its activities on new product growth, capacity expansion, operational & quality optimisation, and genetics development, while in Australia LGP focused on optimising quality, growing its flower portfolio, and expanding its resin extraction capability. The Company also introduced three new vaporisation products and a new oil product during the period. During the financial year, LGP achieved $25.6 million in sales revenue, an increase of nearly 30% from the prior year, as flower products continued to drive Australian and European market demand. This increase in sales revenue was achieved against a backdrop of healthy growth in the Australian flower market, with over 122 flower suppliers selling over 600 flower products into the market by year end – representing 45% and 62% increases respectively in the last 6-months of the year alone. LGP also continues to be one of a very small number of Australian suppliers with a strong presence in both the Australian and European cannabis markets. Sales and distribution Cultivation and manufacturing 6 Denmark During the financial year, LGP Denmark: • developed eight new finished flower products • increased production in response to surging Australian demand for flower including LGP’s new CherryCo brand • continued its genetics development program, identifying over 20 prospective new strains from over 1,300 phenotypes generated from internal and external sources • optimised procedures to improve flower size and product quality in response to market segmentation and began investigating AI-driven product analysis technologies • prepared its operations to meet changing Eu. Ph. quality requirements for cannabis flower applicable from July 2024 Australia During the year, LGP Australia: • developed three new flower product offerings to be introduced post-year end • improved quality of its existing Desert Flame product in line with market feedback • expanded its resin production capacity by over 900% 7 Australia In Australia, LGP flower sales increased by 72%, vaporisation products sales grew strongly following their introduction in July 2023, and oil sales decreased by 17%. In FY2024, LGP: • launched its CherryCo brand, which currently includes the Little Buddies and Signature product ranges • launched 16 new products, being 12 new flower products (including seven CherryCo flower products), three new vape products and one new oil product • continued to expand its distributor base across Australia Europe In Europe, LGP continued to grow sales with its first shipments into Poland and Switzerland and new customers in Germany, Italy and the UK. During the financial year, LGP: • following a two-year registration process, obtained a marketing authorisation and supplied its first shipment of Desert Flame product into the Polish market which was well received • supplied its first customer in Switzerland and first private customer in Italy • supplied two new UK customers and two new German customers 16 LITTLE GREEN PHARMA Annual Report 2024 Encouraging patient demand for flower products in UK and Switzerland have also resulted in further orders from LGP distributors. In Germany, the post-financial year announcement of partial cannabis legalisation has already generated anecdotal reports of significant growth in the medicinal cannabis clinic market, with LGP expecting demand to flow upstream to cannabis flower suppliers in the near term. 17 During the financial year, LGP continued to provide a robust educational and engagement service for its network of independent and new cannabis prescribers, including: • online training courses, webinars, virtual and face-to-face meetings including by independent medical practitioners • practitioner support with TGA applications • medical science liaison team support across both East and West coasts • mentoring program for new medicinal cannabis prescribers • online portals for patients and healthcare professionals to access a range of educational resources • LGP’s prescriber-led Compassionate Access Scheme Program under which patients receive discounted or free of charge medications Health practitioner engagement and customer care 8 The Company also contributed to the Drive Change campaign and the DVA lobby group for the reimbursement of cannabis PTSD treatments for veterans and participated as an active member of the Emerging Therapeutics Association of Australia (ETAA). Meanwhile, LGP's Customer Care Team has continued as the Australian medicinal cannabis industry's most trusted and effective customer support service and has become a key distinguishing feature from the services provided by other medicinal cannabis sponsors in Australia. In recognition of these achievements, LGP has been nominated for several Cannabiz Awards including Best Patient Focused Initiative, R&D Project of the Year, Best Education / Engagement Initiative, and Company of the Year. 18 LITTLE GREEN PHARMA Annual Report 2024 Research and innovation 9 During FY2024, LGP continued to contribute to the global investigation of the treatment of chronic diseases with medicinal cannabis, including through its collaboration with the University of Sydney on the QUEST Initiative and its continuation of this study with Curtin University under the Global QUEST Initiative study. Peer reviewed findings from the first 3-months of the original QUEST Initiative participant responses were published in 2023 in open access journal PLOS One https://journals.plos.org/plosone/article?id=10.1371/ journal.pone.0290549 with the 12-month findings currently progressing through review for publication in a peer reviewed scientific journal in the coming months. In May 2023, Curtin University and LGP continued the QUEST Initiative’s previous work by launching the Global QUEST Initiative longitudinal observational study. The Global QUEST Initiative study aims to assess the impact on quality of life as well as health economic impacts on patients with various chronic diseases prescribed medicinal cannabis. To date, the Global QUEST Initiative has recruited over 1000 patients and has collected over 6-months of data. The QUEST Global study is endorsed by MS Research Australia, Arthritis Australia, Chronic Pain Australia, Epilepsy Action Australia and HIF. In addition to the QUEST studies and publications: • LGP has also participated or contributed to two further publications in international journals including in conjunction with Curtin University’s publication of the Pharmacohistory of Cannabis Use—A New Possibility in Future Drug Development for Gastrointestinal Diseases in the highly respected, peer-reviewed International Journal of Medical Science: https://doi.org/10.3390/ijms241914677 • LGP also entered into agreements to supply or provided products to 12 other clinical studies in Australia and Europe including: • the Care NSW Trial, comprising Mater Research trials Med Can 2 and Med Can 3 which study symptom management in patients with cancer and advanced cancer • the Med Can Drive study which is assessing the ability to detect THC levels from CBD dominant products in patient sample of saliva, blood and urine • the Southern Cross University double-blind, placebo-controlled trial assessing oral cannabis for fibromyalgia • the Queensland Children’s Hospital multi- centre two-arm parallel trial for symptom management in children with advanced cancer • four double-blind, placebo-controlled clinical studies with various French institutions and hospitals that are still pending registration and propose to investigate the use of cannabis and CBD products for the treatment of joint pain following endocrine therapy in patients with early-stage breast cancer, the regulation of pathological behaviours in elderly patients with Alzheimers and dementia, the efficacy and tolerance of cannabidiol in patients with severe pruritus, and effect of different doses of cannabidiol (CBD) on the activation of autophagy and inflammation genes and functional consequences in virologically controlled HIV-infected patients 19 LGP’s psychedelics business is operated by Reset Mind Sciences (Reset), a wholly owned subsidiary of the Company. Following the TGA’s announcement in March 2023 of the down-scheduling of psilocybin and MDMA with effect from 1 July 2023, Reset leased a unique property in Perth that incorporates an office, clinic, and Good Manufacturing Practice (GMP) manufacturing facilities and completed the fit-out of its clinic which is now ready for operations. In December 2023, the Reset-sponsored Western Australian psilocybin clinical trial was also formally launched at the clinical trial site at Harry Perkins Institute of Medical Research in Perth. Clinical trial recruitment is progressing well with 10 participants enrolled and two dosing sessions conducted during the financial year, giving Reset a significant first mover advantage given the limited number of trials currently underway in Australia. In November 2023, LGP announced that it proposed to demerge Reset from the LGP Group by way of in-specie share issue and associated capital raise by way of Prospectus offer from Reset. In February 2024, Reset withdrew the offer following the UK AIM stock exchange’s decision that as Psychedelic Assisted Psychotherapy (PAP) is not currently permitted in the United Kingdom, UK funds were not able invest in Reset and Reset was not capable of listing on a UK stock exchange. This withdrawal meant Reset remains part of the LGP Group. Psychedelics 10 Meanwhile, in France: • LGP continued to be the single largest supplier of products to the French medicinal cannabis Pilot which ceased in March 2023, with LGP supplying >70% of all products during the financial year, and was appointed as only one of two suppliers into the 9-month post-Trial period which continues the treatment of existing Pilot patients for financial consideration • The outcomes from the French Pilot directly resulted in the legalisation of medical cannabis in France, with the French Government creating a new ‘ad hoc’ medicinal cannabis supply authorisation pathway to take effect from January 2025 • LGP is presently preparing its applications for the first French supply authorisations for the supply of a broad range of products into the French market in January 2025. These supply authorisations are akin to marketing authorisations for registered pharmaceutical products and impose rigorous pharmaceutical and manufacturing standards well in excess of those required for the manufacture and supply of unapproved medicinal cannabis products in any other territory In Australia, the Company also progressed its novel drug obesity trial with Curtin University which examined the ability of selected phyto-and endo-cannabinoids to induce secretion of a powerful hormonal mediator known to induce satiety, slow down digestion, lower blood sugar and ultimately promote weight loss. Based on findings from the trial outcomes to date, which included positive outcomes on fatty liver conditions, the Company proposes to use the results of the trial for product formulation purposes. Research and innovation continued 20 LITTLE GREEN PHARMA Annual Report 2024 Pathway to sustainability – green, on both sides of the equation The following table sets out the Six Dimensions of Impact including the Company’s current performance and areas of focus: Environmental, Social, Governance (ESG) A World of Difference 11 Impact dimension Areas of focus Status Highlights Economic vitality Meaningful occupational purpose Group employees are engaged in meaningful careers that contribute significant economic benefits to broader society and stakeholders. Creating jobs across supply chain (internal & external) Group engages a broad and diverse workforce and contractor base across entire supply chain, from cultivation through to distribution and stakeholder engagement. Regional and community contribution Group provides significant employment and recruitment opportunities in regional WA and regional Denmark (EU). Environmental sustainability Energy consumption and management LGP purchases 75% renewable power for its Danish operations and also disposes of its organic waste to a local Danish renewable power producer who in turn generates and supplies waste heat to LGP's facility which is used to warm the facility and reduce power consumption. LGP’s Australian cultivation facility has optimised the timing of its growing lights to off-peak hours to further reduce energy consumption, and is also investigating solar capability to reduce reliance on grid power. Pesticide and contaminant management The Group uses organic, non-hazardous, non-dangerous protectants as part of its integrated pest management regime. Water and wastewater management The WA facility uses hydroponic watering systems that minimise water loss and maximise application. The Denmark facility collects rain water from the rooftops of all its facilities and uses this to water its crops. All excess water from watering is collected in tanks and reused. The facility can store up to 9,000m3 of rainwater on site in closed basins. Only wastewater from processing and cleaning in WA are disposed via sewerage systems. Waste and hazardous materials All organic waste is composted on site at WA facility, while LGP’s Denmark facility currently provides its organic waste to a local Danish renewable power producer who in turn generates and supplies waste heat to LGP’s Danish Facility used to warm the facility and reduce power consumption. Rockwool used in LGP’s Danish production facilities is redelivered to producer and recycled. The Danish facility has also introduced a waste management recycling programme covering its paper, plastic, metal and biological waste outputs. In LGP’s WA facilities, ethanol is reclaimed and disposed of in compliance with all regulatory requirements. At LGP, our core business of supplying cannabis medicines to patients with various medical conditions positions us as a leader in environmental, social, and governance (ESG) initiatives as our product and service offerings inherently ensure strong performance across three of the Six Dimensions of Impact: economic vitality, lifetime well-being, and societal enablement. Our Green Committee is dedicated to enhancing our performance in the remaining dimensions. This committee identifies and addresses any deficiencies, ensuring our continuous progress on the ESG compliance journey. These efforts are designed to cultivate distinctive competencies and generate value for both our shareholders and society at large. We believe our commitment to these dimensions will drive sustainable growth and create long term value for all stakeholders. The table below outlines the Six Dimensions of Impact, highlighting LGP’s current performance and areas of focus: We believe these efforts will create distinctive competencies and create value for the benefit of both shareholders and society. 21 Impact dimension Areas of focus Status Highlights Lifetime well-being Improving quality of life of patients and employees LGP’s products and services significantly and positively impact patient quality of life. Provide benefits and opportunities for employee growth A flat management structure, broad geographic reach and rapidly growing Group provides broad and frequent opportunities for the development and growth of LGP employees. Supplying reliable medicines to patients Company has consistently provided high-quality cannabis medicines to the Australian and European markets since 2018. Product quality and safety All Company medicines meet stringent regulatory requirements for all applicable markets and Company’s pharmacovigilance activities demonstrate a beneficial safety and risk / benefit profile for its medicines. Customer welfare Company strives to address all prescriber and patient concerns and has received consistently positive feedback and testimonials. Ethical capacity Compassionate access Company offers a compassionate access programme to eligible patients. Data security Company utilises high security rated platforms and software in connection with storage of any personal information and complies with applicable privacy guidelines. Board gender and independent governance structure Company currently has 40% female Board representation including one female non-executive director and one female executive director, as well as a majority of independent non-executive directors. Strong leadership and business ethics Company enjoys high-performing leadership and management culture with robust business ethics and practices. Selling practices and product labelling Company has helped pioneer innovative and lawful sales and marketing practices in a restrictive regulatory environment. Company complies with all enhanced TGA product labelling requirements. Societal enablement Patient feedback Company consistently receives positive feedback and testimonials and its pharmacovigilance activities demonstrate a beneficial safety and risk/benefit profile for its medicines. Customer service Company provides excellent customer, prescriber and patient service and frequently goes beyond the call to assist stakeholders. Access and affordability Company provides significant support to prescribers and patients seeking to access medicinal cannabis, including through various product and educational platforms as well as medical science liaison and customer care teams. Company also provides a compassionate access programme as well as access to reduced price cannabis medicines through health insurance partnerships and clinical studies. Access and inclusion Employee health and safety Group assets have a robust safety culture at all assets and enjoys a positive safety record since commencement of operations at all facilities. Company continues to refine safety culture, processes and training to reflect safety profile of each asset. Employee engagement & inclusion Group has strong employee engagement and inclusion practices, including through internal communications, reward programmes and Company- sponsored activities and events. Company strives to provide an inclusive workplace for a diverse workforce, including flexible working practices. Company outsources appropriate tasks to a local disability employment provider at its WA production facility. Workplace transparency Company generally provides transparent communications, updates and feedback to workforce, with general improvement throughout financial year. Company to move towards expanding internal communications in line with expanded external communications strategy. Employee gender and age diversity Group has a workforce comprising of over 59% women, with an age range of between 24 – 73 and an average age of 45. 1. Reference - Boston Consulting Group (April 2021), Young D and Gerard M, How to Tell if Your Business Model is Creating Environmental and Societal Benefits. KEY On track Limited progress Achieved ENVIRONMENTAL, SOCIAL, GOVERNANCE (ESG) A World of Difference 11 22 Directors As at the date of this report, the Directors of the Company are: Mr Michael D Lynch-Bell Independent Non-Executive Chair Dr Neale Fong Independent Non-Executive Director Ms Beatriz Vicén Banzo Independent Non-Executive Director Ms Fleta Solomon Executive Director Mr Angus Caithness Executive Director The Directors listed above held these positions throughout the financial year with the exception of Ms Fleta Solomon who resigned from her position as Managing Director on 29 August 2023 and was appointed as Executive Director on the same day. The Directors listed as Independent Directors have been independent throughout the financial year. LITTLE GREEN PHARMA Annual Report 2024 Directors' report The Directors present this report for the year ended 31 March 2024. 12 23 Information on Directors Michael D Lynch-Bell Independent Non-Executive Chair Michael is an experienced corporate finance executive and consultant. Michael was appointed on 13 November 2018. His early Ernst & Young career was focused on auditing clients within the oil and gas sectors and later added mining to his portfolio. Michael also led Ernst & Young’s UK IPO and Global Natural Resources transaction teams in the Transaction Advisory practice. He has been involved advising companies on fundraising, re- organisations, transactions, corporate governance as well as IPOs. Michael is a former Chair of the Bureau and current member of UNECE's Expert Group on Resource Management, non-executive Chair of Serabi Gold plc (SRB.L), and Senior Independent Director and Remuneration Committee Chair of Gem Diamonds Limited (LSE:GEMD). Michael is also Chair of the Company's Remuneration and Nomination Committee. Dr Neale Fong Independent Non-Executive Director Neale is a registered medical practitioner with over 36 years in senior leadership roles in private hospitals, the public health systems, management consulting, academia, health research, aged care and not for profit organisations. Neale is currently CEO of Bethesda Health Care and formerly was Director General of the West Australian Department of Health. Neale is an experienced ASX company director and is currently independent chair of Intelicare (ASX:ICR). He is a former non- executive director of Neurotech International Limited (ASX:NTI) and executive chair of Chrysalis Resources Limited (ASX:CYS), and has been a Fellow of the Australian Institute of Company Directors since 2001. Neale is also Chair of the Company’s Audit and Risk Committee. 24 Angus Caithness Executive Director Angus is an experienced corporate finance executive and consultant in Australia and international markets. Angus has ASX experience as a non-executive Director of Lindian Resources (ASX:LIN), CFO of Hunnu Coal (ASX:HUN) and Company Secretary for the IPO of Haranga Resources (ASX:HAR). Following these roles, Angus acted as CFO of Tavan Tolgoi, the owner of the world’s largest coking coal deposit looking at a US$10 billion dual listing in London and Hong Kong prior to the change in the Mongolian government. Angus was previously an Executive Director at Ernst & Young in London and Australia specialising in initial public offerings of large cap mining companies. Angus is a Harvard Business School alumnus, a Chartered Accountant, has a Master of Science and is a fellow of the Financial Services Institute of Australasia. Beatriz Vicén Banzo Independent Non-Executive Director With over 30 years working in the European pharmaceutical industry, Beatriz is a highly experienced and decorated expert in European pharmaceutical regulatory and quality assurance matters. Prior to joining LGP, Beatriz was the Director of Public Affairs (Market Access and Patient Advocacy), Regulatory and Quality Assurance for Bayer Pharmaceuticals and Consumer Health in Spain, Head of Regulatory Affairs and Permanent Executive Committee Guest at Novartis Pharmaceutical Company. Beatriz holds a Degree in Pharmacy and MBA from the University of Barcelona, a Masters in European Regulatory Procedures from Autonomous University (Barcelona) and a second MBA from ESADE Business School. Since 2015, Beatriz has also lectured the Masters program at the Madrid- based Professional College Talento Farmacéutico and is fluent in four languages. Fleta Solomon Executive Director Fleta was a founder of Little Green Pharma and has grown the company from a medicinal cannabis startup to an industry leading medicinal cannabis brand in Australia and overseas. Fleta has 20 years’ experience in corporate and consumer health markets, is a graduate of the Australian Institute of Company Directors (GAICD) and holds a Bachelor of Science and an MBA from the University of Western Australia. 25 Paul Long Chief Executive Officer In August 2023, the Company appointed Paul Long as its Chief Executive Officer. Paul joined the Company as Chief Operations Officer in 2018 where he played a pivotal role in building the company and achieving strong revenue growth, increasing from $2.2 million in 2020 to $19.9 million in 2023. He also led the company's expansion into international markets with LGP having delivered into or secured distribution partnerships in 11 countries across the UK and Europe. With extensive expertise in the global medicinal cannabis sector and capital markets, Paul is a forward-thinking leader who continues to drive success and innovation in the industry. Alistair Warren General Counsel & Company Secretary Mr Alistair Warren (LLB. BA. Grad. Dip. Applied Econs.) is General Counsel and Company Secretary for the Company. Alistair was previously inhouse legal counsel at BHP Group Ltd and a legal practitioner in private practice with Freehills lawyers (now Herbert Smith Freehills). Other executives 26 LITTLE GREEN PHARMA Annual Report 2024 DIRECTORS' REPORT Directors’ Meetings Audit and Risk Committee Remuneration and Nomination Committee Number eligible to attend Number attended Number eligible to attend Number attended Number eligible to attend Number attended Mr Michael D Lynch-Bell 8 8 4 4 4 4 Dr Neale Fong 8 8 4 4 4 4 Ms Beatriz Vicén Banzo 8 8 4 4 - - Ms Fleta Solomon 8 8 - - 4 4 Mr Angus Caithness 8 8 - 4* - 4* Board and Committee meetings The Directors held eight Directors’ meetings, four Audit & Risk Committee meetings and four Remuneration and Nomination Committee meetings during the financial year: * Invited as guest In addition, 89 circular resolutions were passed. 12 Principal activities During the financial year the principal activities of the Company were: • the cultivation of medicinal cannabis, procurement of raw materials and production of medicinal cannabis medicines • the supply of medicinal cannabis products into Australia and Europe • the supply of medicinal cannabis products for observational and clinical studies and research and development of new medicinal cannabis products • the development of a psychedelics business including sponsoring a clinical trial into the treatment of refractory depression with psilocybin assisted therapy, construction of a psilocybin mushroom cultivation facility, and establishment of a psychedelic treatment clinic. In the Directors’ view, there were no significant changes to the principal activities of the Company during the financial year. 27 DIRECTORS' REPORT 12 Review of operations The operational review contained in both the Strategy section at page 11 and the operational review sections at pages 13 to 17 forms part of this Directors’ Report. During the 2024 financial year the Company continued to consolidate and optimise its operations at its Danish and Australian facilities and develop its genetics portfolio. The Company also continues to expand production at its Danish facility in line with demand from its new CherryCo brand sales. Key operational outcomes for the Company during the year included: • the launch of 16 new products including 12 new flower products and three new vaporisation products • the launch of the Company’s new CherryCo brand • the award of a supply contract for the 9-month French Pilot transition period • sales in three new countries and with four new customers in Europe • the supply of products into seven countries with contracts for supply or distribution in two more • the consolidation of the Company’s genetics pipeline with over 20 genetics in various stages of development • the launch of the QUEST Global Initiative • the appointment of Paul Long as Chief Executive Officer in August 2023 • the commencement of Reset’s PAP clinical trial for the treatment of treatment resistant depression using psilocybin and construction of Reset PAP clinic • the Company’s nomination for various Cannabiz 2024 awards including Best Patient-Focused Initiative, R&D project of the year, Best Education or Engagement Initiative, and Company of the Year. During the year the Company also ceased its proposed demerger of Reset Mind Sciences following UK regulatory determination that UK restrictions around investments in psychedelic assisted psychotherapy (PAP) operations meant UK funds cannot invest in Reset and Reset is not currently capable of listing on a UK stock exchange. The Company also progressed its novel drug obesity trial with Curtin University and based findings from the trial outcomes, which included positive outcomes on fatty liver conditions, proposes to use the results of the trial for product formulation purposes. Key financial outcomes for the Company during the year included: • an increase in revenues to $25,631,830 up nearly 30% from FY2023 • a decrease in loss after tax of ($8,152,558), down from ($9,205,429) in FY2023 • achievement of a gross profit excluding fair value adjustments of $13,630,307, down from $13,841,873 in FY2023 • net tangible assets of $73.8m • the sale of two properties adjacent to LGP’s Australian facility and full repayment of Canopy loan for LGP’s Danish Facility resulting in the reduction in long term debt from $7,636,057 to $3,496,025 with the Danish facility remaining debt-free • cash in bank at 31 March 2024 of $4,973,504 The following key regulatory changes occurred in the periods immediately prior, during and immediately after the financial year: • in March 2023, the rescheduling of psilocybin and MDMA from Schedule 9 to Schedule 8 under certain restricted conditions • in 2023, the European Pharmacopeia (Ph. Eur) adopted a new EU-wide cannabidiol monograph with effect from 1 July 2024 • in 2023, the Ph. Eur. adopted a new EU-wide cannabis flower monograph to take effect from 1 July 2024. The new cannabis flower monograph includes strict heavy metals limits and increases permitted moisture levels from 10% to 12% • in April 2024, the legalisation of cannabis under limited conditions in Germany including for personal use and cultivated in cannabis clubs and the removal of cannabis from the Narcotics List • in April 2024, the recommendation from the Drug Enforcement Administration (DEA) that cannabis be re-scheduled from a Schedule I to a Schedule III drug The partial legalisation of cannabis in Germany and the proposed re-scheduling of cannabis in the US represent the most significant developments in global cannabis regulation since the full legalisation of cannabis in Canada in 2018. 28 LITTLE GREEN PHARMA Annual Report 2024 Material risks The material risks affecting the Company are: Key risk Summary Status and controls Increased market competition Risk of competition from low-cost imports, lower cost, non-GMP compounded cannabis medications, or registered products for key indications, resulting in pricing pressure, reduced gross profts and challenges achieving or maintaining profitability. LGP has strong market and brand position and with economies of scale Company has show it can compete with low-cost jurisdictions. Company also has access to cost-efficient offshore procurement options and monetizes lower-grade flower and offcuts through lower-priced product offerings. War or international conflict Risk that war or conflicts in Europe or Middle East result in higher EU electricity costs, transportation dislocation, or input inflation due to higher energy costs. Company has various transportation solutions and contractual protections against rising input or production costs. Company has taken steps to minimise power use and has moved production in line with committed contracted capacity and lean inventory to avoid overspending on consumables. Key supplier failure Risk that key LGP suppliers cease or refuse to supply key production inputs or services which cannot be easily replaced, resulting in supply dislocation and lower sales. Company has long term contracts for supply of key inputs and services with a range of reputable suppliers as well as exclusive supply arrangements for key territories. Inability to raise capital Risk that LGP cannot raise capital at acceptable price for operational or growth purposes including due to market conditions or company valuation, and is unable to fund growth due to capital constraints including due to poor cash receipts or low cash reserves. Current market conditions for capital raising are relatively weak risking challenges in raising sufficient capital to spur further growth however Company has robust asset base for use in sales or financing activities if required. Company maintains regular communication with supporting brokers to ensure that LGP is well supported. Poor production planning Risk that ineffective systemisation or poor production management and planning results in production delays, stock-outs, high-cost products, or reduced product quality. LGP has spent substantial time integrating and systemising its inventory and production planning across its facilities and forging close connections between sales and operational units to ensure accurate market information and supply forecasts. Company continues to upgrade its systemisation and planning processes and procedures. Material business interruption Risk that natural or man-made disasters or shortages of critical inputs significantly interruption cultivation or supply operations or result in the loss of genetic or product lines. Company maintains various manufacturing options to cover temporary shortages or outages and insures facilities for recovery and business interruption costs. Company effectively manages cultivation and manufacturing facilities to minimise pestilence, mould and contamination risk including through multiple segregated rooms to avoid contamination and has back-up generators at both production sites. Loss of key operational licences Risk that LGP fails to comply with key licence terms or breaches pharmaceutical or narcotic laws in relevant territories. Company has dedicated quality and regulatory teams to oversee and manage compliance risk in relevant territories. New risk – key personnel retention Reliance on key personnel and failure to recruit or plan for succession of key directors and executive/senior staff or loss of intellectual property due to key staff departures. History of good retention of key staff and appropriate notice periods for key senior personnel and equity participation, while increased size of LGP group means know-how spread across greater teams. Company has company succession planning and Remuneration & Nomination Committee annual review. Dislocation from rapid business growth Risk that Company grows too rapidly including due to acquisitions or entry into new businesses or projects which results in systems failures, loss of employees or degradation of Company culture. Company undertaking full systemisation review and integration project to ensure any acquisitions or new businesses are adequately incorporated into LGP Group, with LGP’s IT and HR teams overseeing software upgrades and employee integration into LGP Group. Cyber attack Risk that LGP suffers significant cyber attack including due to phishing or hacking activities which results in LGP being ransomed or losing crucial commercial data or private information, resulting in reputational or financial damage. LGP’s IT team together with specialist third party providers oversee LGP’s cyber-defence strategy and provides routine training to LGP staff and systems upgrades. Company is undertaking comprehensive privacy and private information review in line with evolving Australian laws with LGP Denmark already complying with EU GPDR requirements. 29 DIRECTORS' REPORT 12 Of the above, the increased market competition and inability to raise capital risks warrant additional consideration. Global cannabis markets are currently distinguished by their highly competitive and global nature, which has facilitated robust market offerings from a range of suppliers and, inevitably, downward price pressure. Meanwhile, Australian cannabis capital markets remain weak, with local investors taking a wait-and-see approach while offshore investors focus on stock growth in the recently down- regulated US and German markets. LGP accepts that high competition will likely remain a feature of many global cannabis markets, however believes its brand, product and pricing offerings enable it to compete successfully and well with its peers. Increasingly, LGP is also focusing on highly regulated markets with higher barriers to entry such as Poland and France, where LGP’s pharmaceutical experience sets it apart from many local importers and GACP suppliers. Corporate governance update The Company fully complies with the ASX Corporate Governance Principles and recommendations – 4th Edition. A copy of the Company’s Corporate Governance Statement and accompanying Appendix 4G will be issued to ASX on the same day as the announcement of this Annual Report. Impact of conflicts The LGP Group and its production and logistics operations have not been materially affected by the war in the Ukraine or conflicts in the Middle East. The war in the Ukraine continues to influence power prices in Europe however these have decreased by more than 50% from the end of FY2023. Environmental issues and climate change The Company’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or Territory. Meanwhile, the Company believes it is relatively well- positioned to manage the effects of climate change compared to its peers and other industries. Changing weather patterns: Currently, the Company cultivates and manufactures its cannabis flowers in indoor and glasshouse cultivation facilities. These facilities are self-contained and rely primarily on electric LED lights and external water supplies and are not materially dependent on external climatic conditions, in contrast to outdoor and solar-dependent cultivation operations which are heavily influenced by both weather and temperature conditions. This also means these facilities are not subject to risks of lower plant productivity and yield or increased incidences of pest and diseases otherwise associated with climate change. The Company believes it is relatively well placed to respond to any future market shortages driven by the effect of climate change on third party outdoor and solar-dependent greenhouse cultivation operations. Regulatory changes: The risk of climate change may result in additional regulatory changes, including changes requiring mandatory carbon offsets for all non-renewable electricity supplies or restrictions on use of non-renewable electricity. In addition, changing environmental standards may result in water rationing and recycling and mandatory sustainable waste management practices. The Company purchased renewable power to meet part of its power requirements at both of its production facilities during the year and while the Company does not anticipate material regulatory changes in the short term the Company continues to investigate capital works to include additional solar power production at its Australian facilities, while its Danish site supplies organic waste under an exchange agreement with a local biomass power station and its district heating operations are also adopting renewable power sources in line with the national strategy to achieve power independency through 100% supply from renewable sources. The Company’s sites both operate within high-rainfall areas which limits the potential for future water rationing, with the Company’s West Australian facility already recycling around 75% of its total water usage and both the Australian and Danish facilities using purified rainwater recovered from their facilities in their production cycle. Both of the Company’s facilities also undertake sustainable waste management programs including recycling various waste products, including organic waste, ethanol and growing mediums. Material risks (continued) 30 LITTLE GREEN PHARMA Annual Report 2024 Significant changes in the state of affairs There were no significant changes in the nature or situation of the Company that occurred during the financial year that are not otherwise disclosed in this report. After balance sheet date events The secured loan of $1,857,432 with National Australia Bank which was due for repayment by 31 December 2024 had its due date extended to 31 July 2025. Refer to note 14 for further details. No other matters or circumstances have arisen since the end of the financial period that have significantly affected, or may significantly affect the operations, results of operations or state of affairs of the Group in subsequent financial years. Likely future developments Likely developments in the operations of the Company, and the expected results of those operations in future financial years have not been included in this report as these are likely to result in unreasonable prejudice to the Company. Dividends There were no dividends paid or declared in the reporting period. Remuneration report The Remuneration Report detailed on pages 30 of this Annual Report forms part of this Directors’ Report. Performance securities and options During the financial year the following events and milestones occurred in respect of existing securities held by, and new securities subscribed for by, the KMPs, with remuneration-related securities issued to the KMPs detailed in the Remuneration Report: • On 24 April 2023, 658,330 fully paid ordinary shares were issued to directors in lieu of director fees accrued from FY2023. The issue of the securities was approved by shareholders at the Company's AGM held on 30 August 2022. • On 1 April 2023, 68,000 share rights approved by shareholders and issued to the executive KMPs relating to the Company's financial year 2022 ESIP programme vested. Following the vesting milestone on 1 April 2024, fully paid ordinary shares were issued to the executive KMPs on 24 April 2024. • On 27 September 2023, Executive Director, Ms Fleta Solomon was issued 277,777 placement shares subscribed for at an issue price of $0.18 per share. The issue of the placement shares was approved by shareholders at the Company's AGM held on 29 August 2023 and subscribed for on the same terms and conditions as other investors Auditor’s Independence Declaration The Auditor’s Independence Declaration set out on page 42 of this Annual Report forms part of this Directors’ Report. Directors’ securities The Directors’ interests in securities as at 31 March 2024 are set out in the Remuneration Report. The table below identifies securities held by the Directors as at 30 May 2024: Name Shares Options Performance rights Share rights Mr Michael D Lynch-Bell 1,758,450 250,000 - 210,000 Dr Neale Fong 1,550,729 125,000 - 105,000 Ms Beatriz Vicén Banzo 50,000 - - 220,000 Ms Fleta Solomon 21,873,216 250,000 4,000,000 - Mr Angus Caithness 11,481,441 250,000 4,000,000 - 31 DIRECTORS' REPORT 12 Indemnification and insurance of Directors and Officers Under the Company’s constitution, the Company indemnifies any current or former Director, Company Secretary or Officer of the Company or a subsidiary of the Company out of the property of the Company against (a) any liability incurred by that person in that capacity, (b) legal costs incurred in connection with proceedings, or (c) legal costs incurred in good faith in obtaining legal advice on issues relevant to their performance of functions and duties if approved in accordance with Company policy, except where the Company is forbidden by law to indemnify against such liability or costs or would be void under law. Each Director and Officer has also entered into a Deed of Indemnity, Access and Insurance that provides for indemnity against liability as a Director or Officer, except to the extent such liability is prohibited by the Corporations Act 2001 or any applicable law or recovered under a separate policy of insurance. Pursuant to the Deed, Directors and Officers may also obtain independent professional advice at the Company’s cost in connection with any matter connected with the discharge of that person’s responsibilities, subject to the Board’s written consent, as well as advice in connection with any claim prior to the Company assuming conduct for the claim or with the Board’s consent. The Deed also entitles the Director or Officer to access Company documents and records, subject to undertakings as to security and maintenance of privilege, and to receive Directors’ and Officers’ insurance cover paid for by the Company. During or since the end of the financial period, the Company has paid or agreed to pay a premium in respect of a contract of insurance insuring the Directors and Officers of the Company and its subsidiaries, against certain liabilities incurred in that capacity. The terms of that policy prohibit disclosure of the total amount of the premiums paid for that contract of insurance. Proceedings The Company did not bring any proceedings against any party or seek to intervene in any such proceedings during the financial year. The Company was not a party to any proceedings during the year. Non-audit services The Directors confirm no non-audit services were provided by the auditor (or by another person or firm on the auditor’s behalf) during the financial year. Signed in accordance with a resolution of the Directors: Dr Michael D Lynch-Bell Independent Non-Executive Chair 32 LITTLE GREEN PHARMA Annual Report 2024 The Remuneration Report sets out the Company’s remuneration strategy for the financial year ended 31 March 2024 and provides detailed information on the remuneration outcomes for the Key Management Personnel in accordance with the requirements of the Corporations Act 2001 and its regulations. Remuneration philosophy The Remuneration Committee is responsible for making remuneration recommendations to the Board for the Directors and Key Management Personnel. In line with its Charter, the Remuneration Committee is responsible for: • reviewing and approving the executive remuneration policy to enable the Company to attract and retain executives and directors who will create value for shareholders • ensuring that the executive remuneration policy demonstrates a clear relationship between key director performance and remuneration and recommending to the Board the remuneration of executive and non-executive directors • fairly and responsibly rewarding executives having regard to the performance of the Group, the performance of the executive and the prevailing remuneration expectations in the market and reviewing the Company's recruitment, retention and termination policies and procedures for senior management • reviewing and approving the remuneration of direct reports to the Chief Executive Officer and other senior executives as appropriate; and • reviewing and approving any equity-based plans and other incentive schemes. In accordance with best practice corporate governance, the structures of non-executive Director and executive Director remuneration are different, with the non-executive KMP remuneration focused on director retention and governance, and the executive KMP remuneration focused increasingly on economic profit and sustained growth in shareholder wealth. Relationship between the remuneration policy and Company performance The performance measures for the Company’s short term incentive plan (STI Plan) and long term incentive plan (LTI Plan) have been tailored to align with financial and operational objectives which create value for shareholders. The Remuneration Committee has designed the STI and LTI Plans to motivate, retain, and reward executive performance aligned to the Company’s strategic objectives. Since inception, the Company’s STI Plan and LTI Plan have been designed to align executive KMP performance with the profile of a start-up Australian medicinal cannabis company and, over the past three years, as an Australian medicinal cannabis company seeking to achieve cash flow break-even and profitability. In the years prior to its ASX listing in February 2020, executive KMP remuneration was structured such that KMP cash salaries were well below market rates and with rewards aligned with market growth expectations and predominantly comprised equity and options for the executives, and retention rights for the non- executive KMPs. In the years subsequent to listing, the Company’s KMP remuneration packages continued to focus on the growth of long term shareholder value, with LTI Plan incentives for the executives comprising performance rights with target share price milestones and packages of retention rights for the non-executive KMPs. Post listing on the ASX, in addition to base salary the executive KMP remuneration packages have included STI Plan cash remuneration focused on the achievement of key development targets for the Company in that year. Over time, these targets have Remuneration report 13 33 REMUNERATION REPORT 13 transitioned from focusing on EU market expansion, new facility integration following the acquisition of the Danish facility in 2021, new product development and R&D metrics, towards predominantly financial metrics focusing on achieving cash flow break-even and profitability. The Company expects that the executive KPIs STI Plan targets for financial year 2025 will continue to emphasise this focus on financial targets with a goal to increasing share price and rewarding long term investors. Key Management Personnel The Remuneration Report details the performance and remuneration of Key Management Personnel (KMP) for the financial year 2024. KMPs are defined as persons having authority and responsibility for directing and controlling the activities of an entity directly or indirectly. The KMPs comprise: • Non-executive directors, being the Chair Mr Michael D Lynch-Bell and non-executive directors Dr Neale Fong and Ms Beatriz Vicén Banzo; • three members of the executive team, being Mr Paul Long (Chief Executive Officer), Ms Fleta Solomon (Executive Director) and Mr Angus Caithness (Executive Director). The executives are accountable for managing operational activities, financial control, and risk management of the Company Components of remuneration – Executive team The executive KMP remuneration framework comprises: • base salary, superannuation, and non-monetary benefits • short term performance incentives • long term performance incentives During financial year 2024, executive KMP remuneration was structured according to the relevant employment agreements and performance measures in place. Each of the executive KMP’s employment agreements to 31 March 2024 consisted of fixed remuneration, an STI Plan, and an LTI Plan. In addition, the Mr Paul Long and Ms Fleta Solomon received car-parking benefits. No other bonuses or skill-based payments were received by the executives during the reporting period. Service contracts Chief Executive Officer – Paul Long The structure of the Chief Executive Officer’s remuneration is in accordance with his employment agreement dated 17 October 2019 as revised in August 2023 to reflect his increased salary as Chief Executive Officer. Mr Paul Long is entitled to receive a base salary plus superannuation and is also entitled to participate in the Company’s STI and LTI Plans. This remuneration is reviewed annually and there is no guarantee of increases to remuneration. Express provisions in the agreement protect the Company’s confidential information and intellectual property and either Mr Paul Long or the Company can terminate the agreement by giving 6-months notice in writing to the other party. The Company may summarily terminate the agreement on the grounds of, among other things, serious or persistent breaches of the terms of the agreement, gross or wilful misconduct or if Mr Paul Long is found guilty of any conduct which results in damage to the reputation or the business of the Company. Executive Director – Fleta Solomon The structure of Ms Fleta Solomon’s remuneration is in accordance with her employment agreement dated 1 December 2019 as revised in August 2023 to reflect her decreased salary as Executive Director. Ms Fleta Solomon is entitled to receive a base salary plus superannuation and is also entitled to participate in the Company’s STI and LTI Plans. This remuneration is reviewed annually and there is no guarantee of increases to remuneration. Express provisions in the agreement protect the Company’s confidential information and intellectual property and either Ms Fleta Solomon or the Company can terminate the agreement by giving 6-months notice in writing to the other party. The Company may summarily terminate the agreement on the grounds of, among other things, serious or persistent breaches of the terms of the agreement, gross or wilful misconduct or if Ms Fleta Solomon is found guilty of any conduct which results in damage to the reputation or the business of the Company. 34 LITTLE GREEN PHARMA Annual Report 2024 Executive Director – Angus Caithness The structure of the Executive Director’s remuneration is in accordance with his employment agreement dated 1 December 2019. Under that agreement, Mr Angus Caithness is entitled to receive a base salary plus superannuation and is also entitled to participate in the Company’s STI and LTI Plans. This remuneration is reviewed annually and there is no guarantee of increases to remuneration. Express provisions in the agreement protect the Company’s confidential information and intellectual property, and either Mr Angus Caithness or the Company can terminate the agreement by giving 6-months notice in writing to the other party. The Company may summarily terminate the agreement on the grounds of, among other things, serious or persistent breaches of the terms of the agreement, gross or wilful misconduct, or if Mr Angus Caithness is found guilty of any conduct which results in damage to the reputation or the business of the Company. Base salary and non- monetary benefits Under their service contracts, the base salary for: • the Chief Executive Officer for the period 1 April 2023 to 28 August 2023 was $270,000 plus statutory superannuation, subject to the superannuation cap amount, and from 29 August 2023 to 31 March 2024 was $305,000 plus statutory superannuation, subject to the superannuation cap amount • Executive Director (Ms Fleta Solomon) for the period 1 April 2023 to 28 August 2023, was $305,000 plus statutory superannuation, subject to the superannuation cap amount, and from 29 August 2023 to 31 March 2024, was $270,000 plus statutory superannuation, subject to the superannuation cap amount. During the period 29 August 2023 to 31 March 2024 the Executive Director’s hours of work reduced to 0.6 FTE with the base salary payments pro-rated accordingly during the same period; • Executive Director (Mr Angus Caithness) for the period 1 April 2023 and 31 March 2024 was $270,000 plus statutory superannuation, subject to the superannuation cap amount. In a prior period, the Company provided the COO and now CEO a loan of $300,000 to exercise 1,000,000 options at an exercise price of $0.30. The loan has a fixed interest rate of 4.25% and is secured by his 1,000,000 shares in the Company. Variable Remuneration – Short Term Incentive Plan The STI Plan of each executive KMP’s service contract is a variable remuneration component and comprises an annual cash incentive linked to the achievement of specific performance milestones that are both financial and non-financial in nature. The performance milestones are clearly defined and measurable and based on achievements that are consistent with the Company’s strategic objectives and the goal of enhancing shareholder value. The Remuneration Committee assesses and approves the executive’s performance against these milestones. For the 2024 financial year, the STI Plan set predominantly financial metrics, being revenue, cash flow from operations, total free cash flow (opex and capex), and personal performance metrics each with an allocation of 25% of total award. The performance goals were divided into threshold, target and maximum goals, with executives entitled to 20% of their base salary for achievement of the threshold goals, 40% of their base salary for achievement of the target goals and up to 60% of their base salary for achievement of the maximum goals across all metrics. According to the Board’s assessment, the Executive’s achievements against the above metrics rated an STIP award of 30% of base salary. Accordingly, the executive KMPs received the following short term incentive payments and the Company has accrued the following amounts for the financial year ending 31 March 2024: • Chief Executive Officer (Paul Long): $86,896; • Executive Director (Fleta Solomon): $58,410; and • Executive Director (Angus Caithness): $81,000. Variable Remuneration – Long Term Incentive Plan The LTI Plan is an equity incentive designed to create sustainable growth and shareholder value. The LTI Plan links a significant portion of at-risk remuneration with the Company’s ongoing share price and therefore aligns executive performance with the return to shareholders over the performance period. 35 REMUNERATION REPORT 13 Class Milestone Milestone Period Expiry Date Number of Performance Rights Fair value of securities* Ms Fleta Solomon Mr Angus Caithness I 20 Day VWAP equalling $0.50 3 years from issue 5 years from issue 500,000 500,000 $0.1288 J 20 Day VWAP equalling $0.60 3 years from issue 5 years from issue 500,000 500,000 $0.1147 K 20 Day VWAP equalling $0.75 3 years from issue 5 years from issue 500,000 500,000 $0.0974 Total 1,500,000 1,500,000 Financial year 2023 LTI Plan In February 2023, following shareholder approval the KMP executives were issued the following performance rights under the LTI Plan: A hurdle needs to be satisfied within three-years of the grant date and if achieved, and the employee remains employed then they will receive a third of the performance rights immediately, a third on the first anniversary of the milestone being achieved and the final third on the second anniversary. If a vesting hurdle is not achieved within three-years or the employee leaves, the unvested performance rights lapse. The inputs into the Hoadley Trading & Investment Tools Parisian Barrier Trinomial model and a trinomial up-and-in valuation model were as follows: * The rights were valued with reference to a Hoadley Trading & Investment Tools Parisian Barrier Trinomial up-and-in valuation model. Class I Class J Class K Weighted average share price $0.20 $0.20 $0.20 Weighted average exercise price Nil Nil Nil Expected future volatility 75% 75% 75% Expected life 5 years 5 years 5 years Risk free rate 3.17% 3.17% 3.17% Expected dividend yields Nil Nil Nil Fair value per security $0.1288 $0.1147 $0.0974 Total fair value of securities $128,800 $114,700 $97,400 Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous years as well as historical volatility of a basket of comparable companies over recent trading periods. The expected life and service conditions used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations where appropriate. The performance rights will lapse if an executive’s employment is terminated for cause or poor performance, or if the executive resigns. Early vesting of the performance rights occurs on a change of control or is permitted at the Board’s discretion including among other things, termination of a participant’s employment, engagement, or office with the Company due to death, permanent incapacity, mental incapacity, redundancy, resignation, retirement, or any other circumstance in which the Board may exercise its discretion, subject to applicable laws and ASX requirements. No dividends are payable on performance rights. 36 LITTLE GREEN PHARMA Annual Report 2024 Class Vesting Condition Vesting Date Expiry Date Number of Executive Retention Rights Fair value of securities* Mr Paul Long Ms Fleta Solomon Mr Angus Caithness A Retention Hurdle: Continuous employment with Company until the Vesting Date 1 April 2026 unless Extended 1 April 2028 1,000,000 1,000,000 1,000,000 Mr Paul Long $0.18 Ms Fleta Solomon & Mr Angus Caithness $0.17 Total 1,000,000 1,000,000 1,000,000 Financial Year 2024 LTI Plan On 27 September 2023, following shareholder approval the KMP executives were issued the following Executive Retention Rights under the LTI Plan: For Executive Directors, the value the Company attributed to each Executive Retention Right was $0.17, being the Company’s last closing Share price as at the date of the notice of meeting on 29 August 2023. For the Chief Executive Officer, the value the Company attributed to each Executive Retention Right was $0.18, being the Company’s last closing share price on the date of common understanding. The Vesting Date for a Retention Hurdle may be extended if a relevant Vesting Condition is not met during a relevant performance year (Extended). The Vesting Condition may not be met for a Retention Hurdle in circumstances where an KMP has been absent from work for an extended period of time during a particular performance year or has not worked full time in the role and has not otherwise accrued any employee related entitlements. The Board will have absolute discretion to determine the number of Executive Retention Rights that vest. In making its determination, the Board may have regard to a range of factors, including the KMP’s continued employment with the Company, the full or part-time status of their employment, and any extended absences where a KMP has not attended work to perform the day-to-day duties associated with their role or otherwise accrued employee related entitlements in satisfaction of the Retention Hurdle. Each Executive Retention Rights will automatically convert into one fully paid ordinary share in the Company on the 14th day after a Vesting Notice has been provided. Upon a Change in Control Event (as defined in the Plan) any unvested Executive Retention Rights will automatically vest. An Executive Retention Right is not transferable except with prior written approval by the Company and subject to Corporations Act and Listing Rules, and does not entitle the holder to vote or to any dividends. The Executive Retention Rights were issued for nil cash consideration. The rationale for the issue of the Executive Retention Rights is to reward and incentivise Mr Paul Long, Ms Fleta Solomon and Mr Angus Caithness for their continued service to the Company in accordance with the terms of their negotiated remuneration packages, as well as to retain highly experienced and qualified key management personnel in a competitive market. Executive KMP remuneration review In October 2023, the Company engaged Cebano Consultants (Pty) Ltd an independent remuneration consultant to map executive KMP roles to market based on Mercer market salary data (consultancy fees ZAR165,950: AU$13,630), with the consultant determining the CEO midpoint base salary should be $612,000 compared to his current base salary of $305,000 and the Executive Directors’ midpoint base salary should be $502,000 compared to their current base salary of $270,000. The Company’s Remuneration & Nomination Committee has resolved to review the Executive remuneration as the Company moves towards a more sustained operating cash flow positive position. 37 REMUNERATION REPORT 13 Name Fixed remuneration1 (Cash) Short term incentive (Cash) Share based payments (Issued) Prior period shares in lieu of salary2 (Issued) Total Ms Beatriz Vicén Banzo 72,549 - - - 72,549 Mr Michael D Lynch-Bell 135,405 - - 51,800 187,205 Dr Neale Fong 67,856 - - 25,960 93,816 Ms Fleta Solomon 216,152 75,300 6,120 - 297,572 Mr Angus Caithness 296,830 - 5,440 40,885 343,155 Mr Paul Long3 202,203 40,500 - - 242,703 990,995 115,800 11,560 118,645 1,237,000 Components of remuneration – Non-Executive Directors As per the ASX Listing Rules the aggregate remuneration of non-executive directors shall be determined by a resolution approved by shareholders at a general meeting. The aggregate remuneration threshold is currently set at $500,000 per annum as approved by shareholders at a General Meeting in November 2021. Non-executive directors receive fixed remuneration plus superannuation for their services. During the financial year, Mr Michael D Lynch-Bell’s annual Director fees were $122,400 plus superannuation, while Dr Neale Fong and Ms Beatriz Vicén Banzo’s annual Director fees were each $61,200 plus superannuation. Presently no additional fees are paid to Non-Executive Directors for being a member of any Board committees. Following shareholder approval in August 2022, Mr Michael D Lynch-Bell and Dr Neale Fong agreed to receive a proportion of their Director’s fees for the period July 2022 to March 2023 in shares based on the fortnightly VWAP over that period. These shares in lieu were issued in April and July 2023. On 27 September 2023, following shareholder approval Mr Michael D Lynch-Bell received 140,000 retention rights and Dr Neale Fong and Ms Beatriz Vicén Banzo received 70,000 retention rights each with a value of $0.17 per retention right and vesting on 20 February 2026. The retention rights were valued at the prevailing share price at the date of grant. No other bonuses or skill-based payments were received by the non-executive directors during the reporting period. Remuneration paid 31 March 2024 1. Salaries and fees in 31 March 2024 includes post employment benefits. 2. Shares issued in the current financial year in relation the salary sacrificied in the prior financial year whereby Mr Michael Lynch-Bell and Dr Neale Fong sacrified 40% of their salary for the period July 2022 through to March 2023, and Mr Angus Caithness sacrificed 40% for the period July 2022 to September 2022, and thereafter 20% for the period October 2022 to March 2023. 3. The remuneration paid for Mr Paul Long is from date of appointment as CEO, 29 August 2023 to 31 March 2024. The amounts disclosed below are not the same as the remuneration expensed in relation to each KMP in accordance with the accounting standards (31 March 2024: $2,792,868, on page 39). The directors believe that the remuneration received is more relevant to users for the following reasons: • the statutory remuneration is based on historic cost and does not reflect the value of the equity instruments when they are actually received by the KMPs. • the statutory remuneration shows benefits before they are actually received by the KMPs. • share based payment awards are treated differently under the accounting standards depending on whether the performance conditions are market conditions (no reversal of expense) or non-market conditions (reversal of expense where shares fail to vest), even though the benefit received by the KMP is the same (nil where equity instruments fail to vest). The information in this section has been audited together with the rest of the remuneration report. 38 KMP statutory and share based reporting F. Solomon A. Caithness M. Lynch-Bell N. Fong B. Vicéz P. Long5 FY2024 FY2023 FY2024 FY2023 FY2024 FY2023 FY2024 FY2023 FY2024 FY2023 FY2024 Salary and fees 194,700 251,039 270,000 220,475 135,405 66,679 61,200 30,434 72,549 44,700 185,808 Shares rights in lieu of salary - - - 57,375 - 67,808 - 33,982 - - - Movement in entitlements1 (119) 15,713 22,746 17,545 - - - - - - 1,992 Other non cash benefits2 4,200 4,200 - - - - - - - 15,000 2,450 Post employment benefits 21,452 24,506 26,830 19,616 - - 6,656 3,120 - - 16,395 Short term incentive - cash 58,410 75,300 81,000 81,000 - - - - - - 51,185 Long term incentive - shares with milestone achieved3 19,470 78,946 27,000 75,446 - - - - - - 17,062 Long term incentive - shares with milestone outstanding4 505,021 262,327 505,021 260,545 - - - - - - 297,478 Long term incentive - retention shares 53,429 - 53,429 - 34,118 56,278 17,059 28,139 17,600 11,250 33,323 Expense for year 856,563 712,031 986,026 732,002 169,523 190,765 84,915 95,675 90,149 70,950 605,693 Performance related 68% 59% 62% 57% N/A N/A N/A N/A N/A N/A 60% Director interest in shares 21,837,216 21,559,439 11,449,441 11,437,571 1,688,450 1,669,991 1,515,729 1,506,478 50,000 50,000 2,894,191 1. Movement in entitlements includes movements in annual leave and long service leave provisions. 2. Other non cash benefits represent car parking paid for by the company. Other non-cash benefits represent car parking paid for by the company and sign-on shares for Ms Beatriz Vicén Banzo when she joined the Company as a non-executive director in July 2022. 3. Performance rights for which hurdles have been met, but service condition outstanding. 4. Two sets of Performance rights for which neither the performance hurdles and/or the service conditions have been met: First set is made up of 3 Tranches of 500,000 performance rights each for Ms Fleta Solomon, Mr Angus Caithness and Mr Paul Long with share price hurdles of $0.95, $1.10 and $1.25 and a two year service condition from the date of hurdle achievement. Second set is made up of 3 Tranches of 500,000 performance rights each for Ms Fleta Solomon and Mr Angus Caithness with share price hurdles of $0.50, $0.60 and $0.70 and a two year service condition from the date of hurdle achievement. 5. The remuneration paid for Mr Paul Long is from date of appointment as CEO, 29 August 2023 to 31 March 2024. The Directors interest in shares is reflected as at 31 March 2024. 39 Name Balance at the start of the year Number granted Issued on conversion of share rights Shares in lieu of salary* Subscription shares** Balance at the end of the year Mr Michael D Lynch-Bell 1,383,743 - - 304,707 - 1,688,450 Dr Neale Fong 1,363,025 - - 152,704 - 1,515,729 Ms Beatriz Vicén Banzo 50,000 - - - - 50,000 Mr Paul Long 2,839,691 - 54,500 - - 2,894,191 Ms Fleta Solomon 21,523,439 - 36,000 - 277,777 21,837,216 Mr Angus Caithness 11,176,942 - 32,000 240,499 - 11,449,441 Shares The table below shows a reconciliation of shares held by each KMP from the beginning to the end of the financial year. *Shares in lieu of salary for period July 2022 to March 2023 as approved by shareholders at Annual General Meeting dated 29 August 2022. **Shares issued on 27 September 2023 subscribed for as part of a Placement by the Company and approved by shareholders at Annual General Meeting on 29 August 2023. These shares were not issued as part of KMP remuneration. Performance rights Balance at the end of the year Name Balance at the start of the year Number granted Vested and converted Forfeited Unvested Vested Mr Michael D Lynch-Bell - - - - - - Dr Neale Fong - - - - - - Ms Beatriz Vicén Banzo - - - - - - Mr Paul Long 3,000,000 1,000,000 - - 4,000,000 Ms Fleta Solomon 3,000,000 1,000,000 - - 4,000,000 - Mr Angus Caithness 3,000,000 1,000,000 - - 4,000,000 - Share rights Balance at the end of the year Name Balance at the start of the year Number granted Vested and converted Forfeited Unvested Vested Mr Michael D Lynch-Bell 140,000 140,000 - - 210,000 70,000 Dr Neale Fong 70,000 70,000 - - 105,000 35,000 Ms Beatriz Vicén Banzo 150,000 70,000 - - 220,000 - Mr Paul Long 86,500 - 54,500 - - 32,000 Ms Fleta Solomon 72,000 - 36,000 - - 36,000 Mr Angus Caithness 64,000 - 32,000 - - 32,000 Performance Rights The table below shows a reconciliation of performance rights held by each KMP from the beginning to the end of the financial year, including how many performance rights were granted, vested and converted during the year. Share Rights The table below shows a reconciliation of share rights held by each KMP from the beginning to the end of the financial year, including how many share rights were granted, vested and converted during the year. REMUNERATION REPORT 13 40 LITTLE GREEN PHARMA Annual Report 2024 Loan to key management personnel In a prior period, the Company provided the Chief Operations Officer and now CEO a loan of $300,000 to exercise 1,000,000 options at an exercise price of $0.30. The loan has a fixed interest rate of 4.25% and is secured by his 1,000,000 shares in the Company. Voting of shareholders at last year’s annual general meeting The Company received 98.5% ‘yes’ votes on its remuneration report for the 2023 financial year. The Company did not receive any specific feedback at the annual general meeting or throughout the year on its remuneration practices. 41 Independent Auditor’s report 14 42 Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth, WA 6000 PO Box 700 West Perth WA 6872 Australia Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au DECLARATION OF INDEPENDENCE BY ASHLEIGH WOODLEY TO THE DIRECTORS OF LITTLE GREEN PHARMA LTD As lead auditor of Little Green Pharma Ltd for the year ended 31 March 2024, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Little Green Pharma Ltd and the entities it controlled during the period. Ashleigh Woodley Director BDO Audit (WA) Pty Ltd Perth 30 May 2024 BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 43 BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth, WA 6000 PO Box 700 West Perth WA 6872 Australia Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au INDEPENDENT AUDITOR'S REPORT To the members of Little Green Pharma Ltd Report on the Audit of the Financial Report Opinion We have audited the financial report of Little Green Pharma Ltd (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 March 2024, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including material accounting policy information and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 31 March 2024 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material uncertainty related to going concern We draw attention to Note 1 c) in the financial report which describes the events and/or conditions which give rise to the existence of a material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern and therefore the group may be unable to realise its assets and discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this matter. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. LITTLE GREEN PHARMA Annual Report 2024 These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Carrying value of non-current assets Key audit matter How the matter was addressed in our audit The Group has recognised intangible assets, property, plant and equipment and right of use assets as disclosed in Notes 10, 11 and 12 of the financial report. Accounting standards require an assessment of indicators of impairment annually, or more frequently if indicators of impairment exist, for each cash generating unit (CGU). Determining the existence of indicators of impairment for a CGU is complex and subjective as the assessment involves the use of forward-looking estimates, which are inherently difficult to determine with precision. There is also a level of judgement applied by the Group in determining the key inputs into these forward-looking estimates. Accordingly, this was considered to be a key audit matter. Note 10 of the financial report discloses the accounting policy for assessment of impairment and the significant judgements and estimates made. Our audit procedures included, but were not limited to the following: • Assessing the appropriateness of the Group’s identification of CGUs and management’s allocation of assets to the carrying value of CGUs based on our understanding of the Group’s business and internal reporting; • Evaluating management’s ability to accurately forecast cash flows by assessing the precision of the current year actuals against forecasted outcomes; • Evaluating management’s assessment of indicators of impairment for each CGU, which included considering the performance of the assets, external market conditions and operating expenditure; and • Assessing the adequacy of the related disclosures in Note 10 of the financial report. Valuation of biological assets and inventory Key audit matter How the matter was addressed in our audit AASB 141 Agriculture requires biological assets to be measured at fair value less cost to sell or, in the absence of a fair value, at cost less impairment. Inventories of harvested cannabis are transferred from biological assets at their fair value less costs Our procedures included, but were not limited to the following: • Obtaining management’s valuation model and considering whether the inputs are reasonable and the model is mathematically accurate; 45 to sell up to the point of harvest, which becomes the initial deemed cost. Valuation of biological assets and inventory was a key audit matter due to the complexity of the valuation model and the extent of management estimates and judgements involved in determining appropriate inputs to the valuation model. Note 8 of the financial report disclose a description of the accounting policy and significant estimates and judgements applied to the Group’s biological assets and inventory balances. • Evaluating management’s judgements and assumptions used in the valuation model as follows: o Yield per plant based on historic actuals; o Cannabinoid yield per gram based on historical actuals; o Average production cost per gram by comparing to historical trends and testing a sample of recent costs to external supporting evidence; and o Sales price less cost to sell by agreeing to different types of revenue contracts; and • Testing whether inventory is held at the lower of cost and net realisable value by comparing unit cost to recent sales prices achieved; • Assessing whether product used in or destined for use in research and development purposes has been adequately provided for; and • Reviewing disclosures in Note 8 of the financial report and ensuring compliance with the accounting standard. Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 31 March 2024, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. 46 LITTLE GREEN PHARMA Annual Report 2024 In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 33 to 41 of the directors’ report for the year ended 31 March 2024. In our opinion, the Remuneration Report of Little Green Pharma Ltd, for the year ended 31 March 2024, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit (WA) Pty Ltd Ashleigh Woodley Director Perth, 30 May 2024 47 Financial report 15 48 LITTLE GREEN PHARMA Annual Report 2024 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 March 2024 Note 31 March 2024 31 March 2023 Revenue 2 25,631,830 19,859,123 Cost of goods sold (12,001,523) (6,017,250) Gross profit before fair value adjustment 13,630,307 13,841,873 Fair value adjustment of inventory sold (3,734,139) (2,179,129) Gain on fair value of biological assets 8 3,222,201 2,139,169 Gross profit 13,118,369 13,801,913 Expenses Distribution costs (5,065,413) (3,712,165) General and administrative (4,010,648) (4,661,519) Sales and marketing (3,892,954) (3,511,524) Education (1,168,104) (768,367) Licences, permits and compliance costs (1,115,741) (1,386,967) Insurance (709,608) (633,222) Research and development (6,319,887) (6,594,837) Commissioning cost - (4,844,327) (22,282,355) (26,112,928) Loss from operations (9,163,986) (12,311,015) Interest income 171,057 48,918 Finance expense 5 (635,469) (928,839) Research and development incentive 7 1,479,855 5,129,030 Government grants 6,333 63,880 Loss on disposal (16,909) - Net foreign exchange 6,561 (558,625) Loss before tax (8,152,558) (8,556,651) Tax expense 6 - - Loss after tax from continuing operations (8,152,558) (8,556,651) Loss for the year from discontinued operations - (648,778) Loss after tax (8,152,558) (9,205,429) Other comprehensive income Exchange fluctuations on translation of foreign operations 873,245 4,515,026 Total comprehensive loss net of tax (7,279,313) (4,690,403) Basic and diluted net loss per share (cents) From continuing operations (2.72) (3.42) From continuing and discontinued operations (2.72) (3.68) Basic and diluted weighted average number of shares outstanding 299,574,657 249,835,340 The accompanying notes form an integral part of these consolidated financial statements. 49 FINANCIAL REPORT 15 Note 31 March 2024 31 March 2023 Assets Current assets Cash and cash equivalents 4,973,504 12,400,319 Trade and other receivables 7 3,403,920 7,381,795 Biological assets 8 1,585,847 1,492,199 Inventory 9 10,929,710 8,909,108 Prepaid expenses 580,648 423,254 Assets held for sale - 539,152 Total current assets 21,473,629 31,145,827 Property plant and equipment 10 59,497,328 63,280,305 Intangible assets 11 3,462,388 3,638,639 Right-of-use assets 12 1,497,922 125,527 Refundable deposits 315,529 386,185 Other financial assets 43,284 43,284 Total non-current assets 64,816,451 67,473,940 Total assets 86,290,080 98,619,767 Liabilities Current liabilities Accounts payable and accrued liabilities 13 2,830,403 3,355,075 External borrowings 14 2,359,271 2,351,603 Employee benefit obligations 15 964,058 1,069,046 Lease liability 12 271,167 95,315 Deferred payment 14 - 4,109,512 Liabilities associated with assets held for sale - 57,971 Total current liabilities 6,424,899 11,038,522 External borrowings 14 1,136,752 5,284,454 Lease liability 12 1,374,071 27,100 Employee benefit obligations 15 97,582 41,385 Total non-current liabilities 2,608,405 5,352,939 Total liabilities 9,033,304 16,391,461 Net assets 77,256,776 82,228,306 Shareholders' equity Share capital 16 101,931,740 101,183,206 Reserves 7,562,282 5,129,788 Accumulated deficit (32,237,246) (24,084,688) Total shareholders' equity 77,256,776 82,228,306 The accompanying notes form an integral part of these consolidated financial statements. CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 March 2024 50 LITTLE GREEN PHARMA Annual Report 2024 Share capital Share based payment reserve Translation reserve Accumulated deficit Total No. Shares $ As at 31 March 2022 240,211,214 90,254,064 2,370,798 (2,266,548) (14,879,259) 75,479,055 Loss after tax - - - - (9,205,429) (9,205,429) Translation reserve - - - 4,515,026 - 4,515,026 Total comprehensive loss - - - 4,515,026 (9,205,429) (4,690,403) Share placements 53,265,278 9,259,759 - - - 9,259,759 Share based payments - - 1,017,650 - - 1,017,650 Transfer on exercise 3,700,000 1,364,269 (1,364,269) - - - Employee share plan 654,000 278,864 596,251 - - 875,115 Shares in lieu of services 55,555 25,000 260,880 - - 285,880 Options exercised 5,000 1,250 - - - 1,250 As at 31 March 2023 297,891,047 101,183,206 2,881,310 2,248,478 (24,084,688) 82,228,306 Loss after tax - - - - (8,152,558) (8,152,558) Translation reserve - - - 873,245 - 873,245 Total comprehensive loss - - - 873,245 (8,152,558) (7,279,313) Share placements 277,777 50,000 - - - 50,000 Share based payments - - 2,008,382 - - 2,008,382 Transfer on exercise 475,500 349,928 (349,928) - - - Employee share plan - - 63,595 - - 63,595 Shares in lieu of services 1,428,912 343,606 (162,800) - - 180,806 Options exercised 20,000 5,000 - - - 5,000 As at 31 March 2024 300,093,236 101,931,740 4,440,559 3,121,723 (32,237,246) 77,256,776 The accompanying notes form an integral part of these consolidated financial statements. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 March 2024 51 31 March 2024 31 March 2023 Operating activities Net loss before tax (8,152,558) (9,205,429) Items not involving cash Net fair value movements of biological assets 511,938 39,960 Depreciation and amortisation 3,078,879 2,984,494 Share-based payments 2,252,783 2,326,981 Finance expense 635,469 928,839 Foreign exchange differences 20,009 176,016 Loss on disposal of property, plant and equipment 16,909 - Changes in non-cash operating working capital Inventory and biological assets (2,280,798) (2,255,852) Accounts receivable 4,593,796 (1,897,102) Prepaid expenses (157,394) 137,839 Accounts payable and accrued liabilities (403,451) (134,503) Employee benefits obligations (48,791) (41,413) Net cash flows provided by / (used in) operating activities 66,791 (6,940,170) Investing activities Purchase of property, plant and equipment (716,360) (1,816,997) Purchase of intangible assets (727,708) (3,111,651) Payment of deferred consideration (4,168,712) (9,102,404) Refund of deposits 70,656 - Disposal of property, plant and equipment 2,737,989 - Net cash flows used in investing activities (2,804,135) (14,031,052) Financing activities Proceeds from issue of equity 50,000 10,113,750 Proceeds from options exercised 5,000 - Costs associated with the issue of shares - (837,741) Cash inflow from borrowings - 5,812,488 Repayment of borrowings (4,683,260) (1,971,484) Repayment of principal portion of lease liabilities (92,299) (83,429) Net cash flows provided by / (used in) financing activities (4,720,559) 13,033,584 Net change in cash and cash equivalents (7,457,903) (7,937,638) Cash and cash equivalents, beginning of year 12,400,319 20,086,504 Effect of changes in foreign exchange 31,088 251,453 Cash and cash equivalents, end of year 4,973,504 12,400,319 The accompanying notes form an integral part of these consolidated financial statements. CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 March 2024 FINANCIAL REPORT 15 52 LITTLE GREEN PHARMA Annual Report 2024 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 March 2024 NATURE OF OPERATIONS AND BASIS OF PREPARATION Little Green Pharma Ltd ACN 615 586 215 (the "Company", "LGP") was incorporated in Australia and is a for profit company limited by shares. The financial report covers LGP and its controlled entities (the "Group"). The Company’s registered office is at Level 2, 66 Kings Park Road, West Perth, 6005 Western Australia. The financial statements were authorised for issue by the directors on 30 May 2024. The directors have the power to amend and reissue the financial statements. a) Statement of compliance These consolidated general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001 which ensures compliance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. b) Basis of measurement The financial statements have been prepared on the historical cost basis, except for certain assets that are measured at revalued amounts or fair value, as explained in the accounting polices below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards. The classification of comparative figures has been changed where the change improves the understandability of the financial information. c) Going concern These consolidated financial statements have been prepared on the going concern basis which assumes that the Group will be able to realise its assets and discharge its liabilities in the normal course of business for the foreseeable future. At 31 March 2024, the Group had incurred a loss after tax of $8,152,558 (31 March 2023: $8,556,651) and achieved net operating cash inflows of $66,791 (net operating cash outflow 31 March 2023: $6,940,170). The Group has prepared a cash flow forecast which demonstrates the Group will have sufficient cash flows to meet all commitments and working capital requirements to continue its ongoing operations however it is dependent on the Group achieving a combination of the following: • Continued sales growth through increased patients, market share in Australia and international markets; and • Managing costs and production in line with the cash flow forecast. These conditions indicate that a material uncertainty exists which may cast significant doubt on the entity’s ability to continue as a going concern, and therefore the entity may be unable to realise its assets and discharge its liabilities in the normal course of business and at amounts stated in the financial report. The Directors believe the Group will continue as a going concern as they are confident the operational improvements mentioned above will be achieved and have obtained an extension of the external borrowing facility until July 2025, refer Note 26. 53 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS 15 e) Functional and presentation currency The Company’s functional currency is Australian dollars and the Group’s presentation currency is also Australian dollars. All amounts presented are in Australian dollars unless otherwise specified. f) New and revised Australian Accounting Standards In the current year, the Company has applied all new and revised standards and interpretations issued by the Australian Accounting Standards Board that are relevant to its operations or effective for accounting periods starting on or after 1 April 2023. The Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards. g) New standards and interpretations not yet adopted Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for 31 March 2024 reporting periods and have not been early adopted by the group. These standards, amendments or interpretations are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. Name of Entity Country of Incorporation Functional Currency Ownership 31 March 2024 31 March 2023 Little Green Pharma AG Germany Euro 100% 100% Little Green Pharma Switzerland GmbH Switzerland CHF 100% 100% LGP Operations Pty Ltd Australia AUD 100% 100% LGP Holdings Pty Ltd Australia AUD 100% 100% Reset Mind Sciences Ltd Australia AUD 100% 100% Little Green Pharma ApS Denmark DKK 100% 100% Lab Services Denmark ApS Denmark DKK 100% 100% The Company has the following subsidiaries: d) Basis of consolidation These consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances are eliminated on consolidation. Subsidiaries are all entities over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. 54 LITTLE GREEN PHARMA Annual Report 2024 2. MEDICINAL CANNABIS SALES Set out below is the disaggregation of the Group's revenue from contracts with customers: 31 March 2024 31 March 2023 Type of revenue Flower products 15,761,723 9,187,253 Oil products 8,651,358 10,380,605 Vaporiser products 666,053 - Other 552,696 291,265 Total revenue 25,631,830 19,859,123 Geographical markets Australia 22,474,825 15,946,187 Europe 3,157,005 3,912,936 Total revenue 25,631,830 19,859,123 Revenue is recognised when control of the goods has transferred to the customer, being when the goods have been shipped to the customer's specific location (delivery). A receivable is recognised by the Group when the goods are delivered to the customer as this represents the point in time at which the right to consideration becomes unconditional. 31 March 2024 31 March 2023 Salaries and wages 9,664,824 11,191,332 Short term incentives 113,255 157,897 Post employment benefits 842,238 796,026 Share based payments 2,098,413 2,184,974 12,718,730 14,330,229 3. PAYROLL COSTS The Group's payroll expense are comprised of: 55 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS 15 31 March 2024 31 March 2023 Interest on secured external borrowings 543,226 472,327 Interest on deferred payment 59,200 448,979 Interest on obligations under leases 33,043 7,533 635,469 928,839 5. FINANCE EXPENSE The Group's finance expenses is comprised of: 31 March 2024 31 March 2023 Depreciation 2,816,288 2,380,249 Amortisation 262,591 147,698 3,078,879 2,527,947 4. DEPRECIATION AND AMORTISATION The Group's depreciation and amortisation expense are comprised of: Depreciation and amortisation method Property, plant and equipment is depreciated on a straight line basis over the lessor of the assets estimated useful life or its lease term as per below: • Land – not depreciated. • Buildings – 40 years straight line • Greenhouses – 20 years straight line • Production equipment – 15 years straight line • Office leasehold improvements – life of the lease • Office equipment – 5 years straight line • Computer software – 2 to 5 years straight line • Patents – 20 years straight line • Pharmaceutical quality systems – 10 years straight line • Product development costs – 5 years straight line The Company's pharmaceutical quality system represents the policies, procedures and standards required to comply with Good Manufacturing Practices (GMP). Significant accounting estimate: estimation of useful lives of assets Depreciation and amortisation methods, useful lives and residual values are reviewed at each reporting date. Changes can occur due to things such as technical innovations, obsolescence or abandonment of non-strategic assets. 56 LITTLE GREEN PHARMA Annual Report 2024 Total tax losses in Australia for which no deferred tax assets has been recognised is $5,101,800 (31 March 2023: $1,843,729). Utilisation of carry forward tax losses is dependent upon the satisfaction of the requirements of the Income Tax Assessment Act 1936 and 1997 within Australia (continuity of ownership and same business test with no expiry if tests are achieved) and the relevant loss recoupment provisions in subsidiaries in foreign jurisdictions. Significant accounting judgement: recoverability of carry forward tax losses Carry forward tax losses have not been recognised as an asset because it is not clear when the losses will be recovered. The cumulative future income tax, which has not been recognised as an asset, will only be obtained if the Group derives future assessable income of a nature and an amount sufficient to enable the benefit to be realised; the Group continues to comply with the conditions for deductibility imposed by law; and no changes in tax legislation adversely affecting the Company realising the benefit. 6. INCOME TAX NOTE The reconciliation of income tax obtained by applying statutory rates to the loss before income tax is as follows: 31 March 2024 31 March 2023 Loss before income taxes from continuing operations (8,152,558) (8,556,651) Loss before income taxes from discontinuing operations - (648,778) Statutory tax rate 25% 25% (2,038,140) (2,301,357) Add/(deduct) • Share based payments 511,980 543,765 • Research and development incentive 936,180 960,833 • Fines and penalties - 93,240 • Entertainment 8,396 - • Foreign losses not recognised 230,122 1,658,244 • Movement in Australia deferred tax not recognised/(recognised) 351,462 (954,725) Income tax (benefit)/expense - - 31 March 2024 31 March 2023 Deferred tax asset/(liability) • Biological assets (968,534) (1,347,309) • Prepayments (594,091) (70,562) • Property, plant and equipment (595,530) (231,699) • Net lease liability 36,829 (778) • Accounts payable and accrued liabilities 158,998 244,014 • Unrealised Foreign Exchange loss (9,533) (12,062) • 40-880 tax balance 211,195 374,227 • Employee entitlements 158,874 170,947 • Development costs - (389,244) Net deferred tax asset/(liabilities) (1,601,692) (1,262,466) Benefit of tax losses not recognised 1,601,692 1,262,446 Net deferred tax asset/(liability) recognised - - Deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: 57 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS 15 31 March 2024 31 March 2023 Trade receivables 2,631,458 1,549,849 Other receivables 772,462 713,771 Research and development incentive receivable - 5,129,030 Allowance for expected credit loss - (10,855) 3,403,920 7,381,795 7. TRADE AND OTHER RECEIVABLES The Group's trade and other receivables is comprised of: Classification of trade and other receivables If collection of the amount is expected in one year or less they are classified as current assets. Trade receivables are generally due for settlement within 30 days and therefore are all classified as current. Fair value of trade and other receivables Trade receivables are recognised and carried at original invoice value less, any allowance for expected credit losses. Significant accounting judgement: expected credit losses The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on historical loss rates, adjusted to reflect current and forward- looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The Group has a limited number of counter parties who it trades with on a regular basis and as such does not expect to incur any material credit losses. 58 LITTLE GREEN PHARMA Annual Report 2024 8. BIOLOGICAL ASSETS The Group's biological assets are comprised of: 31 March 2024 31 March 2023 Opening balance 1,492,199 1,076,173 Costs incurred 6,267,201 4,666,107 Transfer to inventory (9,395,753) (6,389,250) Gain on changes in fair value 3,222,200 2,139,169 1,585,847 1,492,199 9. INVENTORY Harvested cannabis is transferred from biological assets at its fair value at harvest less costs to sell, which becomes deemed cost. Any subsequent post-harvest costs are capitalised to work in progress. Inventory classified as work in progress consists of harvested or purchased cannabis intended to be processed into oil or sold as flower. The cost of inventory is determined using the average cost basis. The Group's inventory is comprised of: Cost of inventories sold to customers amounting to $12,001,523 was recognised as an expense during the year (31 March 2023: $6,017,250). 31 March 2024 31 March 2023 Finished goods 2,659,834 1,315,961 Work in progress 7,957,170 7,268,471 Supplies and consumables 312,706 324,676 10,929,710 8,909,108 Significant accounting judgement and estimate: fair value of biological assets Biological assets are classified as Level 3 on the fair value hierarchy and are determined using the most recent market transaction price. The following inputs and assumptions being subject to significant volatility and uncontrollable factors, which could significantly affect the fair value of the biological assets in future periods: • plant waste – wastage of plants based on various stages of growth; • yield per plant – represents the weighted average grams of dry cannabis expected to be harvested from a cannabis plant, based on historical yields; • cannabinoid yield per gram – represents the weighted average cannabinoids expected to be obtained from a dry gram of cannabis, based on historical yields; • selling price, less costs to sell – based on estimated selling price per gram of dry cannabis based on historical sales and expected sales; and • percentage of costs incurred to date compared to the total costs to be incurred (to estimate the fair value of an in-process plant) – represents estimated costs to bring a gram of cannabis from propagation to harvest. In the current period, the biological assets were approximately 54% complete (31 March 2023 - 49%) as to the next expected harvest date. The average number of days from the point of propagation to harvest is 93 days. The weighted average grams of dry cannabis expected to be harvested from a cannabis plant is 157 grams (31 March 2023- 157 grams). A 20% increase or decrease in the estimated yield of cannabis per plant would result in an increase or decrease in the fair value of biological assets of $344,573 at 31 March 2024 (31 March 2023 - $298,440). A 25% increase or decrease in the average selling price per gram less cost to sell would result in an increase or decrease in the fair value of the biological assets of $430,716 at 31 March 2024 (31 March 2023 - $375,050). At harvest, the estimated average fair value of a gram of cannabis is $2.86 (31 March 2023 - $3.50). 59 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS 15 10. PROPERTY, PLANT AND EQUIPMENT The Group’s property, plant and equipment comprised of: Land & buildings Leasehold improvements Production equipment Office equipment Assets under construction Total Cost As at 31 March 2022 55,029,348 32,760 12,715,213 1,105,843 319,782 69,202,946 Additions 3,055,665 - 584,766 12,309 175,263 3,828,003 Transfers (38,208) - (116,539) (12,829) (327,866) (495,442) Assets moved to held for sale - - (23,267) - (175,263) (198,530) Foreign exchange movements 4,035,227 - 1,044,892 87,127 8,084 5,175,330 As at 31 March 20231 62,082,032 32,760 14,205,065 1,192,450 - 77,512,307 Additions 79,340 262,031 52,594 53,336 269,059 716,360 Disposals (2,754,898) - - - - (2,754,898) Assets moved from held for sale - - 23,267 - 175,263 198,530 Foreign exchange movements 778,011 - 202,091 16,630 597 997,329 As at 31 March 2024 60,184,485 294,791 14,483,017 1,262,416 444,919 76,669,628 Accumulated depreciation As at 31 March 2022 (5,770,126) (11,215) (4,220,750) (828,833) - (10,830,924) Depreciation (1,608,671) (6,559) (686,968) (13,382) - (2,315,580) Transfers - - 1,416 - - 1,416 Foreign exchange movements (595,821) - (416,158) (74,935) - (1,086,914) As at 31 March 20231 (7,974,618) (17,774) (5,322,460) (917,150) - (14,232,002) Depreciation (1,727,272) (29,039) (719,934) (130,359) - (2,606,604) Assets move from held for sale - - (4,768) - - (4,768) Foreign exchange movements (194,962) - (117,336) (16,628) - (328,926) As at 31 March 2024 (9,896,852) (46,813) (6,164,498) (1,064,137) - (17,172,300) Carrying value As at 31 March 20231 54,107,414 14,986 8,882,605 275,300 - 63,280,305 As at 31 March 2024 50,287,633 247,978 8,318,519 198,279 444,919 59,497,328 In the prior period, the Company expected to demerge Reset Mind Sciences Ltd from the Group. This transaction did not eventuate and as such Reset Mind Sciences Ltd is no longer classified as a disposal group held for sale. Significant accounting judgement and estimate: estimation of recoverable amount of the asset The Group assesses impairment of property, plant and equipment at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations whereby management is required to make significant judgements concerning the identification of impairment indicators, such as changes in the expectations of growth, share price performance and other factors that may indicate impairment. Where an indication of impairment exists, a formal estimate of the recoverable amount is made at the reporting period. No impairment indicators were identified by management during or as at the reporting period. In addition, internal valuation models continue to provide sufficient headroom. The following key assumptions were used in the value-in-use models: • Revenue growth rates: these are based on a Board approved budget for the year-ending 31 March 2025 and management estimates for 2026, reflecting strong growth as the Group ramps up sales • Pre-tax discount rate: 13.8% • Long-term growth rate: 2.5% • Sensitivity analysis showed that if revenue targets are not achieved by more than 12%, and there is no change in operating costs, the recoverable value, as determined by the value-in-use models could be below the asset carrying values. (1) The asset allocations have been presented in a format more relevant to the users of the financial statements and the comparative information has been restated to correspond to the current year presentation. 60 LITTLE GREEN PHARMA Annual Report 2024 11. INTANGIBLE ASSETS The Group’s intangible assets comprised of: Patents & trademarks Computer software Pharmaceutical quality system Product development costs Total Cost As at 31 March 2022 120,325 184,938 548,946 - 854,209 Additions 1,464 33,437 - 3,076,750 3,111,651 As at 31 March 2023 121,789 218,375 548,946 3,076,750 3,965,860 Additions 52,374 4,072 - 671,262 727,708 R&D offset - - - (641,368) (641,368) As at 31 March 2024 174,163 222,447 548,946 3,106,644 4,052,200 Accumulated amortisation As at 31 March 2022 (27,140) (75,774) (76,609) - (179,523) Amortisation (5,837) (33,476) (54,770) (53,615) (147,698) As at 31 March 2023 (32,977) (109,250) (131,379) (53,615) (327,221) Amortisation (7,217) (37,042) (54,770) (163,562) (262,591) As at 31 March 2024 (40,194) (146,292) (186,149) (217,177) (589,812) Carrying value As at 31 March 2023 88,812 109,125 417,567 3,023,135 3,638,639 As at 31 March 2024 133,969 76,155 362,797 2,889,467 3,462,388 Significant accounting judgement: capitalisation of new product development costs The capitalisation of product development projects are based on management’s judgement that technological and economic feasibility have been confirmed, this usually occurs when a project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits. 61 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS 15 13. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES The Group's accounts payable and accrued liabilities are comprised of: 12. RIGHT-OF-USE ASSETS & LEASE LIABILITIES The movement associated with the Group’s right-of-use assets is as follows: The Group's lease liabilities are comprised of: 31 March 2024 31 March 2023 Trade and other payables 1,652,946 1,847,676 Accrued liabilities 877,664 1,473,569 Goods and services tax payable 299,793 33,830 2,830,403 3,355,075 31 March 2024 31 March 2023 Current lease liability 271,167 95,315 Non-current lease liability 1,374,071 27,100 1,645,238 122,415 Right of use assets As at 31 March 2022 190,196 Depreciation (64,669) As at 31 March 2023 125,527 Additions 1,582,079 Depreciation (209,684) As at 31 March 2024 1,497,922 Included in the lease liability is an office and facility lease for a term of five years expiring 30 June 2028, with an option to extend for a further five years. The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short term nature. 62 LITTLE GREEN PHARMA Annual Report 2024 14. EXTERNAL BORROWINGS The Group's external borrowings are comprised of: 31 March 2024 31 March 2023 Secured borrowings Current liabilities 2,340,396 2,351,603 Non-current liabilities 983,778 5,122,063 3,324,174 7,473,666 Unsecured borrowings Current liabilities 18,875 - Non-current liabilities 152,974 162,391 171,849 162,391 The Group has the following secured borrowings from National Australia Bank: • A loan of $1,857,432 (31 March 2023: $3,770,000) which was taken out on 24 February 2022 with $1,925,500 being repaid on 3 July 2023. At the reporting date, the loan was due for repayment by 31 December 2024 however post year end this has been extended to 31 July 2025. The loan has a variable interest rate and is secured by the land and buildings held by LGP Holdings Pty Ltd which has a carrying value of $3,430,215 (31 March 2023: $6,179,452). The current effective interest rate is 7.28%. • A revolving credit facility of $2,000,000 (31 March 2023: $2,000,000) which is secured by a chattel mortgage over the underlying equipment held by LGP. The loan carries a fixed interest rate at 7.68% and has an amortised cost of $1,466,742. The Group has complied with the financial covenants of its borrowing facilities during the 2024 and 2023 reporting period. During the year, the Group obtained an unsecured electricity loan from the Danish authorities. The loan has an effective interest rate of 4.4%, repayable over the life of the loan ending 31 October 2028, with a current amortised cost of $171,848. The Group was party to a Loan Note to Canopy Growth Corporation in relation to the Little Green Pharma Denmark ApS acquisition on 21 June 2021, the remaining balance owing of $4,109,512 was repaid on 3 April 2023 with a balance of $nil owing as at 31 March 2024. For the majority of the borrowings, the fair values are not materially different to their carrying amounts, since the interest payable on those borrowings is either close to current market rates or the borrowings are of a short term nature. Liabilities from borrowing reconciliation 31 March 2024 31 March 2023 Opening liabilities from financing activities 7,636,057 3,783,719 Financing cash flows (4,683,260) (2,432,472) New financing - 5,812,483 Finance expense 543,226 472,327 Closing liabilities from financing activities 3,496,023 7,636,057 63 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS 15 Options Number of options Weighted average exercise price Balance as at 31 March 2022 4,073,536 0.45 Granted - - Forfeited (4,073,536) 0.45 Exercised - - Balance as at 31 March 2023 - - Granted - - Forfeited - - Exercised - - Balance as at 31 March 2024 - - 15. EMPLOYEE BENEFIT OBLIGATIONS The Group's employee benefit obligation is comprised of: 31 March 2024 31 March 2023 Current liabilities Annual leave 631,331 680,787 Employee benefits 332,727 388,259 Non-current liabilities Long service leave 97,582 41,385 1,061,640 1,110,431 16. SHARE CAPITAL As at 31 March 2024 a total of 300,093,236 ordinary shares had been issued (31 March 2023 - 297,891,049). During the year 20,000 options with an exercise price of $0.25 per option were exercised and 277,777 shares were issued at $0.18 per share as part of a placement . Non cash financing activities during the year included the issuing of 576,382 ordinary shares in lieu of cash for services at a weighted average price of $0.27 per share totalling $154,365, and the issuing of 852,528 ordinary shares to employees at a weighted average price of $0.22 per share totalling $189,242. The conversion of employee incentive scheme rights resulted in the issuance of 475,500 ordinary shares to employees at a weighted average issue price of $0.74 per share. 17. SHARE BASED PAYMENTS Significant accounting judgement and estimate: the fair value of the share based compensation expense The fair value of share based compensation expense is estimated using the Black-Scholes option pricing model or other similar models and relies on a number of estimated inputs, such as the expected life of the option, the volatility of the underlying share price, and the risk-free rate of return. For share based compensation dependent upon milestones, significant estimates are required as to the probability of that milestone being achieved, along with estimates of each employee satisfying the required service condition. Changes in the underlying estimated inputs may result in materially different results. The Board of Directors has the discretion to determine to whom options, performance rights and other equity instruments will be granted, the number and exercise price as well as the terms and time frames in which they will vest and be exercisable. 64 LITTLE GREEN PHARMA Annual Report 2024 17. SHARE BASED PAYMENTS CONTINUED Performance rights Retention rights Number of rights Weighted average exercise price Balance as at 31 March 2022 7,000,000 0.66 Granted 6,000,000 0.11 Forfeited - - Exercised (2,500,000) 0.40 Balance as at 31 March 2023 10,500,000 0.41 Granted - - Forfeited - - Exercised - - Balance as at 31 March 2024 10,500,000 0.41 Number of rights Weighted average exercise price Balance as at 31 March 2022 1,305,000 0.34 Granted 255,000 0.31 Forfeited - - Exercised (1,200,000) 0.30 Balance as at 31 March 2023 360,000 0.46 Granted 6,780,000 0.17 Forfeited - - Exercised - - Balance as at 31 March 2024 7,140,000 0.18 During the current year, the Company issued 2,000,000 retention rights to Executive Directors and 280,000 retention rights to Non-executive Directors with vesting occurring in 2026. The retention rights issued to Executive Directors have a nil exercise price and a weighted average fair value of $0.17, based on the share price on grant date. The retention rights vest on 31 March 2026 and 20 February 2026 for the Executive Directors and the Non-Executive Directors respectively, assuming the recipient remains employed by LGP. A probability has been factored in based on this assumption. The Executive Director and Non-Executive Director retention rights were approved at the Annual General meeting. A further 4,500,000 retention rights were issued to the employees. The employee retention rights have a nil exercise price and a weighted average fair value of $0.17, based on the share price on grant date. Of these retention rights, 2,500,000 retention rights vests in three tranches on 31 March 2024, 31 March 2025 and 31 March 2026 assuming the recipient remains employed by LGP. The remaining 2,000,000 retention rights vest on 31 March 2026 assuming the recipient remains employed by LGP and upon achievement of other non-market performance hurdles. A probability has been factored in based on this assumption. 65 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS 15 18. FINANCIAL INSTRUMENTS The classification of the Group’s financial instruments, as well as their carrying amounts and fair values, are as follows: 31 March 2024 31 March 2023 Fair value Carrying value Fair value Carrying value Financial assets Amortised Cost Cash and cash equivalents 4,973,504 4,973,504 12,400,319 12,400,319 Trade and other receivables 3,403,920 3,403,920 7,381,795 7,381,795 Refundable deposits 315,529 315,529 386,185 386,185 FVPTL Other financial assets 43,284 43,284 43,284 43,284 Financial liabilities Amortised Cost Accounts payable and accrued liabilities 2,830,403 2,830,403 3,355,075 3,355,075 External borrowings 3,496,023 3,496,023 7,636,057 7,636,057 Lease liability 1,645,238 1,645,238 122,415 122,415 Deferred payment - - 4,109,512 4,109,512 The carrying value of the cash and cash equivalents, trade and other receivables, refundable deposits, accounts payable and accrued liabilities approximate the fair value because of the short term nature. The carrying value of the deferred payment and external borrowings approximate the fair value because of the short term nature and/or the loans are market rate interest-bearing loans. The Company holds an investment in a non-listed entity. The non-listed shares are not actively traded. As quoted prices in active markets are unavailable, consideration is given to precedent transactions involving the sale of the company’s shares, as a basis to assess the value of the equity investment. 66 LITTLE GREEN PHARMA Annual Report 2024 19. FINANCIAL RISK MANAGEMENT The Board has the overall responsibility for the establishment and oversight of the risk management framework. The Audit and Risk Management Committee is responsible for developing and monitoring risk management policies. The Committee reports regularly to the Board on its activities. Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The Group’s Audit and Risk Management Committee oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. a) Market risk i) Foreign exchange risk The Company’s functional and presentation currency is the Australian dollar and the majority of its assets, liabilities, revenue and expenditures are Australian dollar denominated. The Company's German subsidiary has a Euro functional currency and the majority of its assets, liabilities and expenditures are Euro denominated, its Swiss subsidiary has a CHF functional currency and the majority of its assets, liabilities and expenditures are Swiss franc denominated and its Danish subsidiaries have a DKK functional currency and the majority of its assets, liabilities and expenditures are Danish krone denominated. The Group operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to Europe. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the functional currency of the relevant entity. The carrying value of financial instruments that are held in a currency other than the entities functional currency are as follows (expressed in Australian dollars). 31 March 2024 31 March 2023 Financial Assets - EUR Cash and cash equivalents 697,381 1,136,458 Financial Liabilities - CAD Deferred payment - 4,109,512 ii) Cash flow and fair value interest rate risk The Group is exposed to the risk of future changes in market interest rates. The Group is exposed to interest rate risk through its longer term borrowings comprising a $1,857,432 secured loan, with a variable rate, maturing 31 December 2024 (extended post year-end to 31 July 2025 as per note 26). The Group does not hold any other material financial liabilities with variable interest rates. Holding all other variables constant, the impact on post tax profit of a 1 percent increase/ decrease in the current weighted average effective interest rate on the $1,857,432 loan would be a decrease/increase of $18,574. The Group's asset financing arrangement has a fixed interest rate and is therefore not subject to interest rate risk. The value of secured asset finance borrowings with a fixed rate of interest is $1,466,742. 67 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS 15 19. FINANCIAL RISK MANAGEMENT b) Credit risk Credit risk refers to the risk that a counter party will default on its contractual obligation resulting in a financial loss to the Group. Credit risk arises from cash and cash equivalents and credit exposures to sales counterparties and financial counterparties. i) Risk management The Group has adopted the policy of dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. Cash is deposited only with institutions approved by the Board, with all bank and short term deposits being with AA or A rated banks. The Group does not have any other significant credit risk exposure to a single counterparty or any group of counterparties having similar characteristics. ii) Credit quality The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates. All trade receivables are with counterparties with no external credit rating but for which there have been no default in the past. iii) Impaired trade receivables In determining the recoverability of trade and other receivables, the Group performs a risk analysis considering the type and age of the outstanding receivable and the creditworthiness of the counterparty. If appropriate, an impairment loss will be recognised in profit or loss. The Group does not have any impaired trade and other receivables as at 31 March 2024 (31 March 2023: nil). An expected credit losses has been recognised of nil (31 March 2023: $10,855). c) Liquidity risk The Group manages liquidity risk by monitoring immediate and forecasted cash requirements and ensures adequate cash reserves are maintained to pay debts as and when they fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. At the end of the reporting period, the Group held a short term on-demand cash balance of $4,973,504 (31 March 2023: $12,400,319) that was available for managing liquidity risk. Management monitors rolling forecasts of the Group's available cash reserves on the basis of expected cash flows. Refer to note 14 for full details of financing facilities available to the Group. 68 LITTLE GREEN PHARMA Annual Report 2024 up to 1 year Between 1 and 5 years Total contractual cash flows Carrying amount liabilities At 31 March 2024 Accounts payable and accrued liabilities 2,830,403 - 2,830,403 2,830,403 Lease liability 271,167 1,991,028 2,262,195 1,645,238 External borrowings 2,359,274 1,440,885 3,800,159 3,496,023 Deferred payment - - - - Total non-derivatives 5,460,844 3,431,913 8,892,757 7,971,664 At 31 March 2023 Accounts payable and accrued liabilities 3,355,075 - 3,355,075 3,355,075 Lease liability 95,315 38,397 133,712 122,415 External borrowings 2,351,603 5,965,923 8,317,526 7,636,057 Deferred payment 4,109,512 - 4,109,512 4,109,512 Total non-derivatives 9,911,505 6,004,320 15,915,825 15,223,059 20. CAPITAL MANAGEMENT The Group’s objective when managing its capital is to ensure sufficient debt and equity financing to fund its planned operations in a way that maximises the shareholder return given the assumed risks of its operations. Through the ongoing management of its capital, the Company will modify the structure of its capital based on changing economic conditions. In doing so, the Company may issue new shares or take on debt. Annual budgeting is the primary tool used to manage the Group’s capital. Updates are made as necessary to both capital expenditure and operational budgets in order to adapt to changes in risk factors, proposed expenditure programs and market conditions. i) Maturities of financial liabilities The table below analyses the Group's financial liabilities based on their contractual maturities. The amounts are the contractual undiscounted cash flows with balances due within 12-months being equal to their carrying value as the impact of discounting is not significant. 69 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS 15 21. OPERATING SEGMENTS The Group’s chief operating decision maker examines the Group’s performance both from a product and geographic perspective and has identified two reportable segments of its business. These are defined as Australia and Europe: cultivation, production and distribution of cannabis flower and oil products to Australian and European customers. The segment information below does not include notional write downs of intercompany loans or investments. The following is an analysis of the Group’s reportable operating segments: Australia Europe Intersegment eliminations Total Consolidated 31 March 2024 Revenue 25,149,910 11,722,149 (11,240,229) 25,631,830 Loss after tax (7,232,071) (823,757) (142,062) (8,197,890) Assets Current assets 14,645,130 6,783,514 - 21,428,644 Non-current assets 19,443,873 45,372,578 - 64,816,451 Total assets 34,089,003 52,156,092 - 86,245,095 Liabilities Current liabilities 5,498,052 926,847 - 6,424,899 Non-current liabilities 2,455,431 152,974 - 2,608,405 Total liabilities 7,953,483 1,079,821 - 9,033,304 Consolidated 31 March 2023 Revenue 19,044,049 3,392,650 (2,577,576) 19,859,123 Loss after tax (2,103,816) (6,946,472) (155,141) (9,205,429) Assets Current assets 25,364,877 5,780,950 - 31,145,827 Non-current assets 18,895,514 48,578,426 - 67,473,940 Total assets 44,260,391 54,359,376 - 98,619,767 Liabilities Current liabilities 5,131,180 5,907,342 - 11,038,522 Non-current liabilities 5,352,939 - - 5,352,939 Total liabilities 10,484,119 5,907,342 - 16,391,461 70 LITTLE GREEN PHARMA Annual Report 2024 22. PARENT ENTITY 31 March 2024 31 March 2023 Total current assets 16,291,953 24,444,334 Total non-current assets 66,656,389 68,229,276 Total assets 82,948,342 92,673,610 Total current liabilities 2,239,150 5,094,879 Total non-current liabilities 3,452,416 5,352,939 Total liabilities 5,691,566 10,447,818 Share capital 101,931,740 101,183,206 Reserves 4,349,108 2,866,223 Accumulated deficit (29,024,072) (21,823,637) Total shareholder's equity 77,256,776 82,225,792 Total comprehensive loss net of tax (7,200,435) (4,677,830) The financial information for the parent entity, Little Green Pharma Ltd, has been prepared on the same basis as the consolidated financial statements with the exception of its investment in its subsidiaries which have been accounted for at cost. (a) Compensation of key management personnel of the Group: 23. RELATED PARTY DISCLOSURES 31 March 2024 31 March 2023 Salaries and fees1 950,931 824,950 Short term incentive - cash 190,595 156,300 Post employment benefits 71,333 47,242 Share based payments 1,580,009 772,932 2,792,868 1,801,423 The key management personnel disclosure for the financial year ended 31 March 2023 is made up of five directors. The key management personnel disclosure for the financial year ended 31 March 2024 is made up of five directors, as well as the newly appointed CEO. The remuneration for the CEO is from the date of appointment as CEO, 29 August 2023 to 31 March 2024. (1) Salaries and fees include share rights issued in lieu of salary, movements in the annual leave and long service leave provisions, shares issued as part of compensation to Ms Beatriz Vicén Banzo, as well as car parking paid for by the company. (b) Loan to key management personnel In a prior period, the Company provided the COO and now CEO a loan of $300,000 to exercise 1,000,000 options at an exercise price of $0.30. The loan has a fixed interest rate of 4.25% and is secured by his 1,000,000 shares in the Company. 71 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS 15 24. AUDITORS' REMUNERATION The auditor of the Group for the current year was BDO Audit (WA) Pty Ltd 26. EVENTS AFTER THE REPORTING DATE The secured loan of $1,857,432 with National Australia Bank which was due for repayment by 31 December 2024 had its due date extended to 31 July 2025. Refer to note 14 for further details. No other matters or circumstances have arisen since the end of the financial period that have significantly affected, or may significantly affect the operations, results of operations or state of affairs of the Group in subsequent financial years. 31 March 2024 31 March 2023 Amounts received or due and receivable by BDO and related network firms for: Audit or review of financial reports • Group 129,259 129,805 • Subsidiaries 33,158 43,335 Total remuneration for audit and review of financial reports 162,417 173,140 25. IMPACTS AND RESPONSE TO CONFLICT AND COVID - 19 The ongoing war in Ukraine has negatively impacted European power prices with significant increases across all EU countries including Denmark. The Company has applied for cost relief and Government assistance where available. To date the war has not resulted in any material impact on obtaining critical materials and consumables. As an essential goods provider the Company has continued to operate throughout the COVID-19 pandemic. The Company has taken measures to protect the health and welfare of its staff, maintain cultivation and manufacturing operations, review its cost base, manage cost exposure and counterparty risk, apply for cost relief and Government assistance where available, secure supply chains of critical materials and consumables and defer non-essential research and development. 72 LITTLE GREEN PHARMA Annual Report 2024 DIRECTOR'S DECLARATION The directors of the Company declare that: 1. The financial statements and notes for the year ended 31 March 2024 are in accordance with the Corporations Act 2001 and: a. comply with Australian Accounting Standards, which, as stated in basis of preparation Note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and b. give a true and fair view of the financial position and performance of the consolidated entity; 2. In the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 3. The Directors have been given the declarations by the Managing Director & Chief Executive Officer and the Chief Financial Officer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Board of Directors. Michael D Lynch-Bell Independent Non-Executive Chair 73 LGP milestones timeline OCTOBER Canada legalises cannabis JULY First to locally produce medicinal cannabis SEPTEMBER First to export medical cannabis samples from Australia FEBRUARY Lists on ASX MARCH Commissions expanded cultivation facility APRIL First commercial export of medicinal cannabis from Australia OCTOBER Granted GMP licence NOVEMBER First export to Germany LGP established 2020 2016 2018 2019 1. 2. 3. 5. 6. 4. 1. FEBRUARY 2020: Lists on ASX 2. MARCH 2020: Commissions expanded cultivation facility 3. FEBRUARY 2021: Launch of The QUEST Initiative 4. JUNE 2021: Acquires large-scale Denmark facility 5. NOVEMBER 2022: Winner National Export Awards 6. MAY 2023: Reset commences first legal cultivation of local psilocybin 16 LITTLE GREEN PHARMA Annual Report 2024 JANUARY Award of French tender FEBRUARY Launch of The QUEST Initiative MARCH Purchase of South-West facility JUNE Acquires large-scale Denmark facility JULY Hancock Prospecting becomes substantial investor Thorney becomes substantial investor SEPTEMBER First Scheule 9 psychedelics licence in Australia Import of first Denmark facility product NOVEMBER Registration of Danish medicinal cannabis product FEBRUARY Awarded Italian Tender APRIL Launched Danish genetic development bank Signed major German distribution agreement MAY Largest supplier to French trial NOVEMBER Winner National Export Awards Flower range significantly expanded FEBRUARY TGA down-schedules MDMA and psilocybin Psilocybin trial ethics approval received MARCH Reset HIF strategic alliance MAY Extended French pilot award Reset commences first legal cultivation of local psilocybin JUNE Winner Cannabiz Awards for R&D Project of the Year & Best Patient Focused Initiative AUGUST Launch of QUEST Global Grant of Polish Marketing Authorisation DECEMBER Launch of second major medicinal cannabis brand CherryCo France integrates cannabis into healthcare system MARCH Company acheives operating cash flow break-even APRIL German legalisation APRIL US rescheduling 2024 2023 2022 2021 75 ASX additional information 17 76 LITTLE GREEN PHARMA Annual Report 2024 Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 6 May 2024. ORDINARY SHARE CAPITAL 301,760,606 fully paid ordinary shares are held by 11,723 individual shareholders. All issued ordinary shares carry one vote per share and carry the rights to dividends. RANGE TOTAL HOLDERS UNITS % UNITS 1 - 1,000 2,298 1,685,369 0.56 1,001 - 5,000 5,113 13,071,707 4.33 5,001 - 10,000 1,810 13,695,504 4.54 10,001 - 100,000 2,266 64,602,000 21.41 100,001 and over 236 208,706,026 69.16 TOTAL 11,723 301,760,606 100.00 There are 6,528 holdings less than a marketable parcel. TOP 20 SHAREHOLDERS (CONSOLIDATED) AS AT 6 MAY 2024 NAME UNITS % UNITS HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 32,309,383 10.71 UBS NOMINEES PTY LTD 32,256,846 10.69 MS FLETA JENNIFER SOLOMON 21,873,216 7.25 BARBRIGHT AUSTRALIA PTY LTD14,420,420 4.78 BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM 7,334,936 2.43 MR ANGUS CAITHNESS 5,751,441 1.91 BANQUO CONSULTING PTY LTD 5,413,333 1.79 FINCLEAR SERVICES PTY LTD 4,217,543 1.40 CG NOMINEES (AUSTRALIA) PTY LTD 4,147,061 1.37 BENONI PTY LTD 4,082,127 1.35 CITICORP NOMINEES PTY LIMITED 2,906,193 0.96 MR PAUL FREDERICK LONG 2,426,191 0.80 MS JENNY LORRAINE MCKAY 2,229,746 0.74 MR DAMIEN MATTHEW BOOTH 1,858,639 0.62 MR MICHAEL DAVID LYNCH-BELL 1,758,450 0.58 JASFORCE PTY LTD 1,705,556 0.57 BNP PARIBAS NOMINEES PTY LTD 1,557,072 0.52 MR SEAN EDWARD REID + MS LOUISE JANE PILKINGTON 1,552,600 0.51 JENSEN JARRAH PTY LTD 1,369,231 0.45 MS RHIANNA LOUISE BELCHAM 1,250,000 0.41 TOTAL 149,269,984 49.47 The number of shareholders, by size of holding, in each class are: 77 SHAREHOLDER INFORMATION X CLASS ESCROW TERM UNITS Fully paid ordinary shares 30 June 2024 1,000,000 ESCROW SECURITIES The following securities are subject to voluntary escrow: CONSISTENCY WITH BUSINESS OBJECTIVES – ASX LISTING RULE 4.10.19 The Company states that it has not used the cash and assets in a form readily convertible to cash that it had at the time of admission in a way consistent with its business objectives. OPTION HOLDINGS 25,462,500 options are held by 206 individual option holders. The Company has the following classes of options on issue as at 6 May 2024 as detailed below. Options do not carry any rights to vote. CLASS TERMS NO. OF OPTIONS LGPOPT1 UNLISTED OPTIONS Exercisable at $0.25 expiring on or before 19 July 2024 25,462,500 25,462,500 No Option holders hold more than 20% of a particular class of the Company’s Unlisted Options. OPTIONS RANGE UNLISTED OPTIONS NO. OF HOLDERS NO. OF OPTIONS 1 – 1,000 - - 1,001 – 5,000 1 2,500 5,001 – 10,000 1 7,500 10,001 – 100,000 152 4,364,356 100,001 and over 52 21,088,144 206 25,472,500 SUBSTANTIAL SHAREHOLDERS AS AT 6 MAY 2024 NAME UNITS % UNITS THORNEY INVESTMENTS 33,312,402 11.04 HANCOCK PROSPECTING 26,739,029 8.86 MS FLETA JENNIFER SOLOMON 21,873,216 7.25 78 LITTLE GREEN PHARMA Annual Report 2024 SHARE RIGHTS AND PERFORMANCE RIGHTS As at 6 May 2024 the Company has the following share rights and performance rights on issue which vest and are convertible (on a 1 to 1 basis) to fully paid ordinary shares upon satisfaction of the relevant Milestone, as follows: SECURITY NUMBER EXPIRY MILESTONE VESTING CONDITIONS Performance Rights (Class F) 1,500,000 17 August 2026 Company's 20-day share price volume weighted average price equals at least $0.95 before 17 August 2024. 500,000 rights vest 12-months after satisfaction of Milestone 500,000 rights vest 24-months after satisfaction of Milestone Holder must be employee at date of vesting. Performance Rights (Class G) 1,500,000 17 August 2026 Company's 20-day share price volume weighted average price equals at least $1.10 before 17 August 2024. 500,000 rights vest 12-months after satisfaction of Milestone 500,000 rights vest 24-months after satisfaction of Milestone Holder must be employee at date of vesting. Performance Rights (Class H) 1,500,000 17 August 2026 Company's 20-day share price volume weighted average price equals at least $1.25 before 17 August 2024. 500,000 rights vest 12-months after satisfaction of Milestone 500,000 rights vest 24-months after satisfaction of Milestone Holder must be employee at date of vesting. Performance Rights (Class I) 2,000,000 27 February 2028 Company's 20-day share price volume weighted average price equals at least $0.50 before 27 February 2026. 500,000 rights vest 12-months after satisfaction of Milestone 500,000 rights vest 24-months after satisfaction of Milestone Holder must be employee at date of vesting. Performance Rights (Class J) 2,000,000 27 February 2028 Company's 20-day share price volume weighted average price equals at least $0.60 before 27 February 2026. 500,000 rights vest 12-months after satisfaction of Milestone 500,000 rights vest 24-months after satisfaction of Milestone Holder must be employee at date of vesting. Performance Rights (Class K) 2,000,000 27 February 2028 Company's 20-day share price volume weighted average price equals at least $0.75 before 27 February 2026. 500,000 rights vest 12-months after satisfaction of Milestone 500,000 rights vest 24-months after satisfaction of Milestone Holder must be employee at date of vesting. Share Rights (Executives Retention) 2,000,000 31 March 2028 Continued employment until date of vesting Rights vest on 31 March 2026 Share Rights (Executive Director Retention) 2,000,000 31 March 2028 Continued employment until date of vesting Rights vest on 31 March 2026 Share Rights (Employee Retention) 201,600 15 April 2025 Continued employment until date of vesting Rights vest on 1 April 2025 Share Rights (Employee) 650,000 1 July 2025 Continued employment until date of vesting Rights vest on 1 April 2025 Share Rights (Employee) 810,000 1 July 2026 Continued employment until date of vesting Rights vest on 1 April 2026 Share Rights (Employee) 820,000 1 July 2026 Continued employment until date of vesting Rights vest on 1 April 2026 Share Rights (Non-Executive Director Retention) – Tranche 1 105,000 20 February 2026 Continued employment until date of vesting Rights vested on 20 February 2024 Share Rights (Non-Executive Director Retention) – Tranche 2 150,000 7 July 2027 Continued employment until date of vesting Rights vest on 7 July 2025 Share Rights (Non-Executive Director Retention) – Tranche 3 280,000 20 February 2028 Continued employment until date of vesting Rights vest on 20 February 2026 79 Phone: +61 8 6280 0050 Email: cosec@lgp.global Website: www.littlegreenpharma.com PO Box 690, West Perth WA 6872